PV (present value)
PV Function
Computes the present value of an investment. The present value is the total amount that a series of future payments is worth now. For example, when you borrow money, the loan amount is the present value to the lender.
Syntax
PV(scalar Rate, scalar NumberOfPeriods, scalar Payment, scalar FutureValue, scalar PayBeginOfPeriod)
Arguments
| Argument | Description |
|---|---|
scalar Rate | Interest rate per period (eg., when working with monthly payments on an investment with an annual rate of 12%, enter 1% as the monthly rate) |
scalar NumberOfPeriods | Total number of payments over the life of the investment (eg., monthly payments on a 3-year loan would have 36 periods; annual payments on the same loan would have 3 periods) |
scalar Payment | Payment made each period; must be consistent over the life of the investment |
scalar FutureValue | Future value or the total amount after the last payment is made |
scalar PayBeginOfPeriod | Whether payment is made at beginning of period, where 1=true, payment is made at beginning of period and 0=false, payment is NOT made at beginning of period (that is, payment is made at end of period) |
Examples:
PV((7.5/100)/12, 24, 250,0, 0)
Returns the present value of an investment that returns $250 at the end of every month for 2 years. The money paid out will earn 7.5% annually.