Basic Present Value, Future Value and Internal Rate of Return Calculator

1. Present Value (PV)

Use case:
PV calculates how much a future amount of money is worth today, given a specific interest rate and number of periods.

Fields:

• Future Value:
  The amount of money you expect to receive in the future.
• Interest Rate (%):
  The annual rate of return or discount rate (as a percentage).
• Periods:
  The number of compounding periods (e.g., years or months depending on context).

Formula:
Present Value (PV) = Future Value ÷ (1 + Discount Rate) ^ Number of Periods
Where:

• r = interest rate (decimal)
• n = number of periods

2. Future Value (FV)

Use case:
FV determines how much an amount today will grow to after a number of periods, at a given interest rate.

Fields:

• Present Value:
  The amount of money you have now (today’s investment).
• Interest Rate (%):
  The expected annual growth rate.
• Periods:
  The number of periods over which the investment grows.

Formula:
Future Value (FV) = PV × (1 + r) ^ n

3. Internal Rate of Return (IRR)

Use case:
IRR finds the rate of return at which the net present value (NPV) of a series of cash flows (including an initial investment) becomes zero.

Fields:

• Initial Investment (Negative):
  The amount you invest at the beginning (enter as a negative value).
• Cash Flows (comma separated):
  A list of expected returns for each period, like 1000,1500,2000.

Concept:
IRR is the interest rate r that satisfies:
0=−C0 + C1/(1+r)^1+ C2/(1+r)^2 +⋯+ Cn/(1+r)^n

It’s typically solved using numerical methods (like Newton-Raphson) because there’s no algebraic solution for multiple periods.