Financial Math

The lessons below cover the math behind personal finance and investing: how money grows over time, what future payments are worth today, and how to read a stock's valuation. Each one explains the formula and walks through a worked example.

Lessons

Compound Interest — How money grows when interest earns its own interest. Covers the formula, compounding frequency, APY, and continuous compounding.

Future Value — What an investment made today will be worth after earning interest for a given number of years.

Present Value — What a future payment is worth right now, discounted at a given rate. The reverse of future value.

Annuities — The math behind a stream of equal payments. Find the lump sum needed to fund a given payment, or find the payment a given lump sum produces.

P/E Ratio — The price-to-earnings ratio: a stock's price divided by its annual earnings per share. What it means and how to use it.