TimeValueOfMoney

Calculate the time value of money (TVM) using continuous compounding

Diagram

Information

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The Real output y indicates the nominal value of the input u at the end (Future Value) or the beginning (Present Value) of a horizon of length u_T using the interest rate u_r according to the formula:

y = u^(u_r * u_T)

The given rate is assumed to be a continuously compounding rate (aka force of interest). Using the switch isCCR automatic conversion of a discrete rate can be activated.

Notes

  • There is no accumulation, so the input is simply transformed at any moment given rate and time horizon values.

See also

PresentValue, ForceOfInterest, AccumulationFunction

Parameters (5)

rate

Value:

Type: Rate (1/s)

Description: Constant compounding rate

T

Value:

Type: Time (s)

Description: Constant time horizon (T >0 → FV, T < 0 → PV)

hasConstantRate

Value: false

Type: Boolean

Description: = true, if the discount rate is given by the constant parameter

hasConstantHorizon

Value: false

Type: Boolean

Description: = true, if the time horizon is given by a constant parameter

isCCR

Value: true

Type: Boolean

Description: = true, the rate does not need conversion to a continuously compounding rate

Connectors (4)

y

Type: RealOutput

Description: Information output signal

u

Type: RealInput

Description: Current value input

u_T

Type: RealInput

Description: Time horizon(T >0 → FV, T < 0 → PV)

u_r

Type: RealInput

Description: Interest rate

Components (7)

rate_x_T

Type: Product_2

Description: Inputs are multiplied

timeValueFactor

Type: Exp

Description: Natural exponential function

timeValue

Type: Product_2

Description: Time value of money

parConstantRate

Type: ConstantConverterRate

Description: Constant rate for compounding

CCR

Type: ForceOfInterest

Description: Continuously compounding rate

unchangedRate

Type: PassThrough

Description: Output is identical to input

parT

Type: ConstantConverterTime

Description: Constant time into the future (time horizon)

Used in Components (1)

TrendBasedForecast

BusinessSimulation.MoleculesOfStructure.InformationProcessing

Trend-based forecast for an exponentially growing quantity