startup-valuation

Time Value of Money

valuation_time_value

Read-onlyIdempotent

Discount future cash to present value, compute NPV, annuities, DCF with terminal value, compound growth, or implied CAGR by selecting the matching method.

Instructions

Discount, compound, and forecast value over time: single future value PV, net present value of a cash-flow stream, annuity present value, discounted cash flow with a Gordon terminal value, constant-rate compound growth of revenue or cash flow, and the implied compound annual growth rate (CAGR). Method selects the formula. Use to convert future cash to today's value, to value a full forecast with a terminal value (dcf), to project a revenue or cash-flow series forward, or to derive the growth rate implied by two values; get the discount rate from valuation_capm or valuation_international. Parameters apply per method: present_value needs future_value + rate + periods; npv needs cash_flows + rate; annuity needs payment + rate + periods; dcf needs cash_flows + rate (optional: terminal_growth); compound_growth needs starting_value + growth_rate + periods; cagr needs starting_value + ending_value + periods. growth_rate must be greater than -1, cagr requires starting_value > 0 and periods > 0, and dcf requires rate greater than terminal_growth. Not for option values (use valuation_advanced) or for expected values over outcomes (use valuation_probability). Only method is required; all other parameters are method-dependent, so supply those the selected method names and omit the rest (defaults apply where defined). Rate and decimal inputs are fractions (0.10 = 10%); probability and weight lists are in [0,1] and sum to 1. Returns value, method, inputs, assumptions, chapter, formula_number and calculation steps; pure arithmetic — no I/O and no external calls — rounded to 2 decimals, with no auth or rate limits. An unknown method, or a missing method-required parameter, returns an error instead of a value.

Input Schema

TableJSON Schema

Name	Required	Description
`rate`	No	Per-period discount rate as a decimal (0.10 = 10%).
`method`	Yes	Formula to apply. Options: present_value = PV = C / (1+r)^t.; npv = NPV = Σ Cₜ / (1+r)^t.; annuity = PV = P·[1-(1+r)^-n]/r.; compound_growth = V_n = V_0 (1+g)^n.; cagr = CAGR = (V_n / V_0)^(1/n) - 1.; dcf = DCF = Σ Cₜ/(1+r)^t + [C_n(1+g)/(r−g)]/(1+r)^n.
`payment`	No	Recurring payment per period, in currency units.
`periods`	No	Number of compounding periods, must be ≥ 1 (may be fractional).
`cash_flows`	No	Cash flows by period, first element at t=1; negatives allowed for outflows.
`growth_rate`	No	Revenue growth rate as a decimal (0.40 = 40%).
`ending_value`	No	Value at t=n to compare against the starting value, in currency units.
`future_value`	No	Future cash amount to discount, in currency units.
`starting_value`	No	Value at t=0 (revenue or cash flow) to grow forward, in currency units.
`terminal_growth`	No	Perpetual growth rate g applied after the forecast window, as a decimal.

Output Schema

TableJSON Schema

Name	Required	Description
`error`	No	Error message when the call fails.
`steps`	No	Intermediate steps for traceability.
`value`	Yes	Computed valuation or metric.
`inputs`	No	Echo of the normalised inputs used.
`method`	No	Formula / method name that produced the result.
`chapter`	No	Source textbook chapter.
`assumptions`	No	Modelling assumptions applied.
`formula_number`	No	Source textbook formula number (e.g. '3.1').
`defaults_applied`	No	Optional parameters that were not supplied, so their documented defaults were used.

Schema Changelog

Changes observed during successful MCP inspections.

Changed2 schema fields changedv2.1.1Oct 2, 2026

changedInput schema / properties / periods / description

Previous value: -"Number of compounding periods (may be fractional)."New value: +"Number of compounding periods, must be ≥ 1 (may be fractional)."

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"
+}

Changed3 schema fields changedv0.1.5Sep 30, 2026

changedInput schema / properties / method / description

Previous value: -"Formula to apply. Options: present_value = PV = C / (1+r)^t.; npv = NPV = Σ Cₜ / (1+r)^t.; annuity = PV = P·[1-(1+r)^-n]/r.; compound_growth = V_n = V_0 (1+g)^n.; cagr = CAGR = (V_n / V_0)^(1/n) - 1."New value: +"Formula to apply. Options: present_value = PV = C / (1+r)^t.; npv = NPV = Σ Cₜ / (1+r)^t.; annuity = PV = P·[1-(1+r)^-n]/r.; compound_growth = V_n = V_0 (1+g)^n.; cagr = CAGR = (V_n / V_0)^(1/n) - 1.; dcf = DCF = Σ Cₜ/(1+r)^t + [C_n(1+g)/(r−g)]/(1+r)^n."

changedInput schema / properties / method / enum

Previous value: -[
-  "present_value",
-  "npv",
-  "annuity",
-  "compound_growth",
-  "cagr"
-]New value: +[
+  "present_value",
+  "npv",
+  "annuity",
+  "compound_growth",
+  "cagr",
+  "dcf"
+]

addedInput schema / properties / terminal_growth

Added value: +{
+  "anyOf": [
+    {
+      "type": "number"
+    },
+    {
+      "type": "null"
+    }
+  ],
+  "default": null,
+  "description": "Perpetual growth rate g applied after the forecast window, as a decimal."
+}

Changed5 schema fields changedv0.1.4Sep 30, 2026

addedInput schema / properties / ending_value

Added value: +{
+  "anyOf": [
+    {
+      "type": "number"
+    },
+    {
+      "type": "null"
+    }
+  ],
+  "default": null,
+  "description": "Value at t=n to compare against the starting value, in currency units."
+}

addedInput schema / properties / growth_rate

Added value: +{
+  "anyOf": [
+    {
+      "type": "number"
+    },
+    {
+      "type": "null"
+    }
+  ],
+  "default": null,
+  "description": "Revenue growth rate as a decimal (0.40 = 40%)."
+}

changedInput schema / properties / method / description

Previous value: -"Formula to apply. Options: present_value = PV = C / (1+r)^t.; npv = NPV = Σ Cₜ / (1+r)^t.; annuity = PV = P·[1-(1+r)^-n]/r."New value: +"Formula to apply. Options: present_value = PV = C / (1+r)^t.; npv = NPV = Σ Cₜ / (1+r)^t.; annuity = PV = P·[1-(1+r)^-n]/r.; compound_growth = V_n = V_0 (1+g)^n.; cagr = CAGR = (V_n / V_0)^(1/n) - 1."

changedInput schema / properties / method / enum

Previous value: -[
-  "present_value",
-  "npv",
-  "annuity"
-]New value: +[
+  "present_value",
+  "npv",
+  "annuity",
+  "compound_growth",
+  "cagr"
+]

addedInput schema / properties / starting_value

Added value: +{
+  "anyOf": [
+    {
+      "type": "number"
+    },
+    {
+      "type": "null"
+    }
+  ],
+  "default": null,
+  "description": "Value at t=0 (revenue or cash flow) to grow forward, in currency units."
+}

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?

Annotations already declare readOnly, idempotent, non-destructive, closed-world, but the description adds substantive context: pure arithmetic with no I/O or external calls, results rounded to 2 decimals, no auth or rate limits, and error behavior (unknown method or missing method-required parameter returns an error). The validation constraints (growth_rate > -1, cagr needs starting_value > 0 and periods > 0, dcf needs rate > terminal_growth) further disclose failure modes.

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?

It is long but front-loaded: purpose and method list first, then usage, then per-method parameter requirements, then constraints and exclusions. Nearly every sentence carries load, though the density is high and a few clauses could be trimmed. No filler or restating of the name.

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?

For a 10-parameter, six-method, multi-constraint tool this covers everything an agent needs: method selection, per-method inputs, required constraints, unit conventions, error behavior, and sibling routing. An output schema exists, so return-value explanation is optional, yet the description still summarizes the return shape, which is a bonus rather than a gap.

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 each parameter is already documented individually (baseline 3). The description adds meaning the schema does not: the per-method parameter mapping, the rule that only method is required and the rest are method-dependent and should be omitted, and the fractions convention. This is genuine added value over the flat schema, though the parameter-level definitions themselves largely duplicate schema text.

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 leads with specific verbs (discount, compound, forecast) and enumerates six concrete methods, each tied to a named financial computation. It explicitly distinguishes itself from sibling tools by naming valuation_advanced (options) and valuation_probability (expected values) as the wrong choices, so an agent can route correctly without opening any 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 gives a when-to-use clause per method ('to convert future cash to today's value', 'to value a full forecast with a terminal value', 'to derive the growth rate implied by two values') and routes the agent to valuation_capm or valuation_international for the discount rate. Exclusions are explicit and named, covering the full when/when-not/alternatives triad.

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

Deploy Server