What Is A Present Value Calculator?

If you have some deposits, then this calculator can determine their present value along with an estimate of what their value will be in the future. Please note that this calculator uses JavaScript. Also, if you are using Internet Explorer, then you may have to change your browser settings for the calculator to be displayed properly.

What Is A Present Value Calculator?

Start Date

This is the date from which you want the present value to be calculated. The calculator supposes this same date to be the day on which the first payment in that period has to be made, provided you deposit an amount in the initial days of every month.

End Date

This is the date at which your account will reach your desired future value which you have to enter in another field.

Future Value

This is the lump sum amount for which you want to determine the worth.

Periodic Deposit

This is the amount that you add to your savings or investments in every period.

Deposit Frequency

This is the regularity with which you will be making your periodic deposits. You can avail any option form yearly, semi yearly, quarterly, monthly, bi–weekly and weekly. You can either deposit an amount at the beginning of this period or at the end of it.

Return Rate

This is the yearly return rate for your investments or savings. This variable is mainly dependent on your investment type. For instance, the annual return rate for S&P 500 was 2.92% on 31st December, 2011 when the ten year period ended. This also included the amount gained from reinvesting the dividends. In the period between January 1970 and December 2011, S&P 500 average return rate was almost 10%. Since the year 1970, the highest return in a year has been recorded at 61% (for the year between June 1982 and June 1983) and the lowest has been recorded at -43% (for the period between March 2008 and March 2009). A savings account at any bank will only pay back the money at 0.25%, which is the highest interest rate. However, there are fewer risks associated with principal balances in this case.

You should always keep in mind that these situations are only hypothetical, and the expected rates in the future can never be forecast with absolute certainty. Moreover, if there is an investment that pays a higher return rate, then it is also subject to increased risk and higher instability. The actual return rate for any investment and the probability of principal loss from an investment can differ a lot with time, particularly if the investments are for the long term.

Compounding

This is the periodicity at which an interest amount is added to your savings account. The more regularly this happens, the quicker will the accumulated amount generate more interest and increase your savings. If you have invested in stocks or mutual funds, then you can choose ‘annual’. If your savings are of some other type, like CDs and bank accounts, then you can select any option.

 

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Blog June 9, 2013 admin No Comment(s)

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