PV
Formulas / PVCalculates the present value of an investment
PV(rate, nper, pmt, [fv], [type])
- rate - the periodic interest rate
- nper - the total number of payment periods in the annuity
- pmt - the payment made each period
- fv - [OPTIONAL] the future value
- type - [OPTIONAL] the type of payment; 0 (default) indicates end of period and 1 indicates beginning of period
Examples
=PV(4.5%/12,5*12,-93.22)The PV function can be used to calculate the present value of a loan. For example, the above formula calculates the present value of a 5-year loan with monthly payments of $93.22 and an annual interest rate of 4.5%. The result of this equation is 5000.26, which is the present value of the loan.
=PV(7%,25,10000)The PV function can also be used to calculate the present value of an annuity. For example, this calculates the present value of an annuity with an annual interest rate of 7%, paying 10,000 per year over 25 years. The result of this equation is -166,535.832, which is the present value of the annuity.
=PV(7%,25,-10000)The PV function can also be used to calculate the present value of a negative annuity. This example calculates the present value of an annuity with an annual interest rate of 7%, paying -10,000 per year over 25 years. The result of this equation is 116,535.832, which is the present value of the annuity as a positive value by entering a negative number for the payment.
Summary
The PV function is a financial function that calculates the present value of a loan or investment. PV uses a constant interest rate in its calculation. The PV function can be used with periodic or constant payments, and it can also be used with a future value investment goal.
- The PV function is a financial function which returns the present value of a series of future payments. It assumes periodic, constant payments and constant interest rates.
- The PV function takes five separate arguments, of which three are required. The default value for the optional future value argument is zero, however, it is required when the pmt argument is not supplied.
- The PV function can calculate an annuity, which is a set of cash flows with the same amount of outflow or inflow cash in each period.
Frequently Asked Questions
What is PV?
What arguments does PV take?
What does PV calculate?
Does PV take periodic payments into account?
