Investment/Loan Graph

Try different values, periods and interest rate to see how
your loan or investment will perform (explanations below)


images/invest-graph.js

Explanations

At 10% Interest money grows by 10% every year (as explained in Compound Interest):

interest compound $1000, 10%=$100, $1100, 10%=$110, $1210, 10%=$121, etc

Which is easier to calculate this way (same result):

Present Value (PV)

To see what money in the future is worth now, go backwards (dividing by 1.10 for 10% Interest):

Example: Sam promises you $500 next year, what is the Present Value?

To bring a future payment backwards one year divide by 1.10

So $500 next year is $500 ÷ 1.10 = $454.55 now (to nearest cent).

The Present Value is $454.55

See a detailed explanation at Present Value.

Net Present Value (NPV)

The Net Present Value is the total of all Present Values, including subtracting money that went out (the money you invested or spent):

Example: You invest $500 now, and get back $570 next year (interest Rate is 10%)

Money Out: $500 now

You invested $500 now, so PV = -$500.00

Money In: $570 next year

PV = $570 / (1+0.10)1 = $570 / 1.10 = $518.18 (to nearest cent)

And the Net Amount is:

Net Present Value = $518.18 - $500.00 = $18.18

So, at 10% interest, that investment is worth $18.18

A Net Present Value (NPV) that is positive is good (and negative is bad).

Read more at Net Present Value

 

Interest (An Introduction) Compound Interest Compound Interest Calculator Investing (Introduction) Present Value Internal Rate of Return Net Present Value Money Index