Time value of money (tvm) – HP Prime Graphing Calculator User Manual

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Finance app

The following cash flow diagram shows a loan from the
lender's point of view:

Time value of money (TVM)

Time-value-of-money (TVM) calculations make use of the
notion that a dollar today will be worth more than a dollar
sometime in the future. A dollar today can be invested at
a certain interest rate and generate a return that the same
dollar in the future cannot. This TVM principle underlies
the notion of interest rates, compound interest, and rates
of return.

Cash flow diagrams

also specify

when

payments occur rela-

tive to the compound-

ing periods.The

diagram to the right

shows lease pay-

ments at the

begin-

ning

of the period.

This diagram shows

deposits (PMT) into an

account at the end of

each period.