How to Use the Interest Calculator
This tool calculates present value (PV) and future value (FV) for complex payment streams with various interest rate conventions. It supports multiple payment frequencies, spot payments, and provides visual verification of cash flows through an interactive chart.
Steps to Use
1. Define Payment Streams
Enter payment details in the Payment Inputs section. Each stream requires:
- Payment Amount – The payment value (can be positive or negative)
- Term (Months) – Total duration in months (disabled for spot payments)
- Frequency – Choose from Monthly, Quarterly, Semi-annual, Annual, or Spot
- Start (Months) – When payments begin (0 = today, defaults to 0)
The tool displays the total number of payments for verification. Use Add New Payment Stream to create multiple cash flow series. For spot payments, only the start month matters as it represents a single payment at that time.
2. Set Interest Rate Parameters
Configure the interest rate in the Interest Rate Settings section:
- Interest Rate (%) – Annual interest rate
- Convention – Select from standard financial conventions:
- ACT/365 (Actual/365) – Actual days, 365-day year
- ACT/360 (Money Market) – Actual days, 360-day year
- 30/360 (Bond Basis) – 30-day months, 360-day year
- ACT/ACT – Actual days, actual year
- Simple Interest – Linear interest calculation
- Compound Interest (Monthly) – Monthly compounding
- Custom Monthly Rate (%) – Override with direct monthly rate if needed
3. View Results and Verify
Results automatically update as you enter data. The Results section shows:
- Present Value (PV) – Net present value of all payment streams
- Future Value (FV) – Future value compounded to the final payment date
Use the Payment Flow Chart to visually verify your inputs. The chart displays monthly payment amounts as bars, with year markers on the x-axis for easy timeline verification.
Output
- Present Value (PV) – All payments discounted to today's value using the specified interest rate and convention
- Future Value (FV) – All payments compounded forward to the final payment month
- Payment Flow Chart – Visual representation of all payment streams aggregated monthly, helping verify correct input timing and amounts
Financial Engineering Features
- Multiple Payment Streams – Handle complex cash flow structures with different frequencies and start dates
- Interest Rate Conventions – Professional-grade conventions used in banking and finance
- Monthly Aggregation – All payments are internally converted to monthly arrays for precise calculation
- Spot Payment Support – Handle single payments at specific future dates
- Visual Verification – Chart prevents input errors common in financial modeling
Notes
- All calculations use monthly compounding based on the selected convention
- The tool handles negative payments (outflows) and positive payments (inflows)
- Chart displays thin bars for precise monthly visualization, even for long-term cash flows
- Best viewed on desktop; mobile experience may be limited for complex inputs
This tool is designed from a financial engineering perspective to handle complex valuation scenarios commonly encountered in structured finance, corporate finance, and investment analysis. By supporting multiple interest rate conventions and providing visual verification, it ensures accuracy in professional financial modeling.
The calculator internally maintains all payment streams in monthly arrays, regardless of the input frequency. This approach enables precise handling of overlapping payment streams, different start dates, and various frequencies within a single calculation. The visual chart serves as a critical verification tool, allowing users to immediately spot timing errors or incorrect payment amounts that could significantly impact valuation results.
