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Financial Calculator

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This calculator is offered as a educational tool to help illustrate the basic concepts of reusable software components and Time Value of Money. It should not be used for financial decisions or in any situation that might result in a financial loss.

Payments Example

You are 65 years old and have saved $400,000 for retirement. You believe you will live 20 more years. You want to leave $100,000 to your family. You can invest at a nominal annual rate of 6% compounded monthly. What amount can you withdraw at the end of each month and still reach all your goals?

  1. Enter -400000 into the present value field (the first field just to the right of the Present Value button). The calculator uses a cash-flow model where amounts you receive are entered as positive values and amounts you pay out are entered as negative values. Since you will payout (deposit) this amount, it is a negative value.
  2. Enter 100000 into the future value field (the second field just to the right of the Future Value button).
  3. Enter 240 (20 years times 12 payments per year) into the Periods field.
  4. Enter 6 or 6.0 into the Rate field.   Note that rate is entered as a percent rather than a decimal (.06). Depending on the language and country settings of your browser, you may need to use a different decimal separator. Click the Options button to see an example of the number format expected.
  5. Click the Options button and confirm that Payments Per year and Compounding Per Year are set to the default values of 12.
     The Pay at end of period checkbox should be checked since your payments are due at the end of each month.
  6. Click the Payment button to calculate the monthly payments (which should be 2,649.2932). Notice that the payment is a positive value since it is money received.

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