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Finance Calculator

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What is meant by a finance calculator?

A calculator which is used to calculate various values of the FV or the future value along with the interest rate or the I / Y or the number of the compounding periods that is N apart from the PMT or the annuity payment is popularly known as the finance calculator. Even one can begin the investment but only if they are aware of the remaining parameters. In addition to this, the present value is in general, known to all.

Finance Calculator

Future value(FV):
Payment(Pmt):
Rate of interest(ir):
Number of Periods(np):
Present value(Pv):

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What is compounding period?

Usually, the word compounding period is associated with the number of times when the mortgage interest is not paid. And following which the mortgage interest (which stands unpaid) is attached to the principal amount of the loan. However, the number of times this compounding periods are added depends on the finance institution.

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What is the meaning of annuity payment?

In simple words, annuity is nothing but a contractual financial product which is usually sold by the financial institutions which has been designed in a manner to not only accept but also grow funds from the said individual. And at the time of annunitization, they pay a stream of the payments to the same individual. However, this is done only after some time & never immediately. Apart from this, when the payments begin, the contract turns towards being known as the annunitization phase.

What is the meaning of interest rate?

These days the word interest rate or the rate of interest is known to almost all the souls around the world especially the people who are associated with the money aspect in one or the other way. So, when the talk is about the interest rate, it means that it is the amount which is added by the lender when the money is being lent by him to another person. Moreover, this rate of interest is based upon the amount being lent apart from the fact that in general cases, the interest rate is expressed in terms of the annual percentage. In addition to this, one has to remember the simple fact the rate of interest would depend on the financial institution or the person lending the money.

How to use a finance calculator?

The method is simple if you wish to know the steps of calculating finance. Read the following steps to have a better understanding as to what would be the procedure for this finance calculator. In the 1st field, one will have to enter the price of the commodity while in the 2nd field, the finance rate (in percentage) is to be mentioned. In addition to this, one should mention the less deposit amount followed by the less trade in allowance. In order to enter the less deposit as well as the less trade in allowance, an individual can take the help of the up & down arrows. Apart from this, the next block requires the information regarding the monthly payment protection. Followed by this, select the number of months & the cost of credit before you click on calculate or making the finance application tab.

Finance calculator formulae

  1. Payment at the end finance formula

\( pv = \frac{1}{ir} (ir\,+\, 1\,)^{- np} (- fv\, ir\, – pmt\, (ir\, + 1\,)^{np} + pmt)\)

  1. Payment at the beginning

\( pv\, = \, – fv\,(ir\, +\, 1\,)^{- np} – pmt\, +\, pmt\,(ir\, +\, 1)^{- np} – \frac{pmt}{ir} + \frac{pmt}{ir}(ir\, + 1)^{- np}\)

In the above equations, PV means the present value while the future value is represented by FV. As far as the interest rate is concerned then it is represented by ir & np means the number of periods while pmt stands for the payment.