Intangible Asset Valuation

Time Value of Money

valuation_time_value

Read-onlyIdempotent

Discount or compound single sums, value level and growing annuities and perpetuities, and compute terminal values via Gordon growth or exit multiple for DCF analysis.

Instructions

Time value of money: discount or compound a single sum, value level and growing annuities and perpetuities, and compute a terminal value by Gordon growth or exit multiple. Method selects the formula. Use to move cash flows through time or to value a terminal value in a DCF; combine with a rate from valuation_discount_rate. For uneven multi-period cash flows use valuation_income_methods; for rate construction use valuation_discount_rate. Per method: present_value needs future_value + discount_rate + periods; future_value needs present_value + discount_rate + periods; annuity_pv needs payment + discount_rate + periods; perpetuity_pv needs payment + discount_rate; growing_annuity_pv needs payment + discount_rate + growth_rate + periods; terminal_value_gordon_growth needs final_year_cashflow + perpetual_growth_rate + discount_rate; terminal_value_exit_multiple needs final_year_cashflow + exit_multiple. Rates and growth are decimals (0.10 = 10%); for terminal_value_gordon_growth the discount rate must exceed the perpetual growth rate. Only method is required; all other parameters are method-dependent — supply those the selected method names and omit the rest (defaults apply where defined). Rates and premiums are decimals (0.10 = 10%). Pure arithmetic: no I/O and no external calls, rounded to 2 decimals; parameters belonging to other methods are accepted and ignored. An unknown method, or a missing method-required parameter, returns an error instead of a value.

Input Schema

TableJSON Schema

Name	Required	Description
`method`	Yes	Formula to apply. Options: present_value = PV = FV / (1 + r)^n.; future_value = FV = PV * (1 + r)^n.; annuity_pv = PV = PMT * [1 - (1 + r)^-n] / r.; perpetuity_pv = PV = PMT / r.; growing_annuity_pv = PV of a constant-growth annuity.; terminal_value_gordon_growth = TV = FCF * (1 + g) / (r - g).; terminal_value_exit_multiple = TV = FCF * exit multiple.
`payment`	No	Recurring payment per period, in currency units.
`periods`	No	Number of periods n (non-negative).
`growth_rate`	No	Per-period growth rate as a decimal (0.03 = 3%).
`future_value`	No	Future cash amount to discount, in currency units.
`discount_rate`	No	Per-period discount rate as a decimal (0.10 = 10%).
`exit_multiple`	No	Exit multiple applied to the final-year cash flow (e.g. 8.0 for 8x).
`present_value`	No	Present amount to compound, in currency units.
`final_year_cashflow`	No	Final-year projected cash flow (FCF), in currency units.
`perpetual_growth_rate`	No	Perpetual growth rate g as a decimal; must be below discount_rate for Gordon growth.

Output Schema

TableJSON Schema

Name	Required	Description
`error`	No	Error message when the call fails.
`steps`	No	Intermediate calculation steps for traceability (one string per step).
`value`	Yes	Computed valuation, rate, or metric.
`method`	No	Formula / method name that produced the result.
`assumptions`	No	Modelling assumptions applied (list of strings or key/value object).
`defaults_applied`	No	Optional parameters that were not supplied, so their documented defaults were used.
`formula_reference`	No	Mathematical formula or reference applied.

Schema Changelog

Changes observed during successful MCP inspections.

Changed1 schema field changedv2.1.1Oct 2, 2026

addedOutput schema / properties / defaults_applied

Added value: +{
+  "description": "Optional parameters that were not supplied, so their documented defaults were used.",
+  "items": {
+    "type": "string"
+  },
+  "type": "array"
+}

Changed2 schema fields changedv0.1.4Sep 30, 2026

changedOutput schema / properties / steps / description

Previous value: -"Intermediate calculation steps for traceability."New value: +"Intermediate calculation steps for traceability (one string per step)."

removedOutput schema / properties / steps / items / type
```
Removed value: -"object"
```

First observedv0.1.0Sep 30, 2026

TDQS

A4.8/5.0

Behavior5/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Beyond the read-only/idempotent annotations, it discloses pure arithmetic with no I/O or external calls, two-decimal rounding, ignored non-matching parameters, and error behavior for unknown methods or missing required parameters. It also states the Gordon-growth constraint that discount rate must exceed perpetual growth rate.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness4/5

Is the description appropriately sized, front-loaded, and free of redundancy?

The description is front-loaded with purpose and usage, then lists method-specific parameters efficiently for a complex seven-method tool. It loses a point for repeating the decimal convention and mentioning 'premiums', which is not a parameter here, making one sentence redundant.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

With an output schema present, the description need not explain return values. It covers method selection, parameter dependencies, decimal formatting, an edge-case constraint, error behavior, and sibling alternatives, giving an agent enough context to call the tool correctly.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters4/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so the baseline is 3, but the description adds a per-method parameter map and clarifies that only method is required while other parameters are method-dependent and defaults apply where defined. It also explains decimal conventions and the discount_rate > perpetual_growth_rate constraint, though some of this repeats schema descriptions.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

The description names a specific finance operation: discounting/compounding single sums, valuing annuities and perpetuities, and computing terminal values. It distinguishes itself from valuation_income_methods and valuation_discount_rate, so an agent can tell what it computes without opening the schema.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines5/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

It explicitly states when to use the tool, including moving cash flows through time or valuing a terminal value in a DCF. It also routes alternatives: uneven multi-period cash flows to valuation_income_methods and rate construction to valuation_discount_rate, and gives per-method parameter requirements.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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