Time Value of Money in Excel
You can calculate the time value of money in Excel or Google Sheets with five built-in functions: FV (future value), PV (present value), NPER (number of periods), RATE (interest rate) and PMT (payment). For example, =FV(0.07/12, 240, 0, -10000) returns about $40,387 — what $10,000 grows to at 7 percent compounded monthly over 20 years. This guide covers each function's syntax, the sign convention that trips people up, and worked examples you can paste straight into a cell.
- The time value of money in one minute
- The five Excel functions you need
- FV and PV: the core calculations
- NPER, RATE and PMT: solving for time, rate and payment
- The sign convention that trips everyone up
- A worked example you can copy
- Excel vs an online calculator
- Assumptions and limits
- Frequently asked questions
The time value of money in one minute
The time value of money is the principle that a sum today is worth more than the same sum later, because money you hold now can be invested and earn a return. Every calculation moves an amount either forward in time (its future value) or backward (its present value) using a rate and a number of periods. Excel bundles all of this into a handful of functions, so you never have to type the algebra by hand. If you would rather not open a spreadsheet at all, the time value of money calculator does the same conversions in your browser.
The five Excel functions you need
These five functions cover almost every time-value question. They work the same way in Excel and Google Sheets. Each solves for one unknown when you supply the others:
| Function | Solves for | Syntax |
|---|---|---|
| FV | Future value | =FV(rate, nper, pmt, [pv], [type]) |
| PV | Present value | =PV(rate, nper, pmt, [fv], [type]) |
| NPER | Number of periods | =NPER(rate, pmt, pv, [fv], [type]) |
| RATE | Rate per period | =RATE(nper, pmt, pv, [fv], [type]) |
| PMT | Payment per period | =PMT(rate, nper, pv, [fv], [type]) |
In every one, rate is the interest rate per period, nper is the number of periods, and type is 0 for end-of-period cash flows (the default) or 1 for the beginning. The arguments in square brackets are optional.
FV and PV: the core calculations
The two functions you will use most are FV and PV. To find what $10,000 becomes at 7 percent, compounded monthly, over 20 years, convert the rate and periods to monthly terms and enter the deposit as a negative number:
The 0.07/12 is the monthly rate, 240 is 20 years in months, 0 is the recurring payment (none here), and -10000 is the starting amount entered as a cash outflow. To go the other way and find what a future $10,000 is worth today, use PV:
The result is negative because it represents the amount you would pay today to receive $10,000 in 20 years. In plain terms, a future $10,000 is worth about $2,476 in today's money at that rate.
NPER, RATE and PMT: solving for time, rate and payment
Because the functions are algebraically linked, you can rearrange the question and let Excel solve for whichever piece is missing.
How long until $10,000 grows to $40,387? NPER returns the number of periods:
What rate is needed? RATE returns the rate per period, so multiply by 12 for the annual figure:
What payment reaches a goal? To build $100,000 in 20 years at 7 percent, PMT returns the deposit per period:
The payment is negative because it is money you put in. So contributing about $192 a month gets you to $100,000.
The sign convention that trips everyone up
The single most common Excel mistake is not the formula — it is the signs. Excel treats every cash flow from your point of view:
- Money leaving your pocket is negative — deposits, investments and payments.
- Money coming to you is positive — the future value you collect or the present value you receive.
If you enter your starting deposit as a positive number, the answer comes back negative, which looks wrong but is just the mirror image. The fix is simple: enter what you invest as a negative number, and the result reads as a positive balance. The other classic error is mixing time units — always pair a monthly rate with a month count, or an annual rate with a year count.
A worked example you can copy
Here are six ready-to-paste formulas, all using 7 percent compounded monthly. They match the figures this site's calculators produce, so you can check your sheet against them.
| What you want | Formula | Result |
|---|---|---|
| Future value of $10,000 | =FV(0.07/12, 240, 0, -10000) | $40,387 |
| Present value of a future $10,000 | =PV(0.07/12, 240, 0, 10000) | −$2,476 |
| Future value of $500/month | =FV(0.07/12, 240, -500, 0) | $260,463 |
| Months to reach $40,387 | =NPER(0.07/12, 0, -10000, 40387) | 240 |
| Annual rate to reach $40,387 | =RATE(240, 0, -10000, 40387)*12 | 7% |
| Payment to reach $100,000 | =PMT(0.07/12, 240, 0, 100000) | −$192 |
No spreadsheet handy? The time value of money calculator runs these same conversions in your browser and shows the year-by-year breakdown — no formulas to type.
Excel vs an online calculator
Both approaches use identical math, so pick the one that fits the task:
- Use a spreadsheet when you want to build a reusable model, chart the growth, or run many scenarios side by side.
- Use an online calculator when you want a quick answer without setting up cells — the time value of money calculator for present and future value, the future value of money calculator for a single sum, or the future value of annuity calculator for recurring payments.
Many people do both: sketch the idea in a calculator, then build it out in a sheet once the numbers look right.
Assumptions and limits
- A constant rate. The functions apply one fixed rate per period; real returns vary, so the output is an estimate.
- Matched periods. Rate and nper must share a time unit — monthly rate with months, annual rate with years.
- Nominal figures. Results are before inflation and tax, both of which reduce real growth.
- Sign convention. Cash paid out is negative and cash received is positive; getting this wrong flips the answer.
Frequently asked questions
The bottom line
Excel and Google Sheets turn the time value of money into five functions — FV, PV, NPER, RATE and PMT — that each solve for one unknown. Keep your rate and periods on the same clock, enter money you pay in as a negative number, and you can answer almost any what-will-it-be-worth or what-do-I-need question in a single cell.
When you want the answer without building a sheet, the time value of money calculator does the same conversions instantly, and the future value of money formula guide covers the algebra underneath.
Disclaimer: This guide is for general educational purposes only and is not financial advice. The examples use assumed rates of return to illustrate the spreadsheet functions; they are projections, not guarantees, and actual results vary with markets, inflation, taxes and fees. Consider speaking with a qualified financial professional before making decisions about your own money.