# Investment/Loan Graph

Try different values, periods and interest rate to see how your loan or investment will perform.

Explanations Below!

(The old flash version is available here.)

## Explanations

At 10% Interest money grows by 10% every year (as explained in Compound Interest):

Which is easier to calculate this way (same result):

## Present Value (PV)

To see what **money in the future** is worth **now**, go backwards (dividing by 1.10 for 10% Interest):

### Example: Sam promises you **$500 next year**, what is the Present Value?

**divide by 1.10**

So **$500 next year** is $500 ÷ 1.10 = **$454.55 now** (to nearest cent).

The Present Value is **$454.55**

See a detailed explanation at Present Value.

## Net Present Value (NPV)

The **Net** Present Value is the total of all Present Values, including subtracting money that went out (the money you invested or spent):

- Add the Present Values you receive
- Subtract the Present Values you pay

### Example: You invest $500 now, and get back $570 next year (interest Rate is 10%)

Money Out: $500 now

**-$500.00**

Money In: $570 next year

^{1}= $570 / 1.10 =

**$518.18**(to nearest cent)

And the Net Amount is:

**$18.18**

So, at 10% interest, that investment is worth **$18.18**

A Net Present Value (NPV) that is **positive is good** (and negative is bad).

Read more at Net Present Value