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#Financial

PV

Excel Functions

Get the present value of an investment

Syntax

EXCEL 
=PV(rate, nper, pmt, [fv], [type])

Arguments

Parameter Description
rate The interest rate per period.
nper The number of payment periods.
pmt The payment made each period.
fv [optional] Future value. If omitted, defaults to zero.
type [optional] Payment type, 0 = end of period, 1 = beginning of period. Default is 0.

Return Value

Present value

Details

The PV function returns the value in today's dollars of a series of future payments, assuming periodic, constant payments and a constant interest rate. You can use the PV function to calculate the present value of a loan or investment when the interest rate and cash flows are constant. The PV function takes five separate arguments, three of which are required as explained below. rate (required) - the interest rate per period. For example, if the annual interest rate is 6% and periods are monthly, then the interest rate is =6%/12 = 0.5% (0.005). You can enter the rate as 6%/12 as a reminder of how it is derived. nper (required) - The total number of payment periods in the annuity. For example, a 5-year car loan with monthly payments has 60 periods. You can enter nper as 5*12 to note how the

Examples

Examples

The PV function can be used to calculate the present value of a loan, when the interest rate, payment, and number of periods are known. For example, t

EXCEL 
=PV(4.5%/12,5*12,-93.22) // returns 5000.26
Examples

In the worksheet shown above, the formula in C10 is:

EXCEL 
=PV(C5/C8,C7,C6)
Present value of annuity

To calculate the present value of an annuity that pays 10,000 per year for 25 years, with an annual interest rate of 7%:

EXCEL 
=PV(7%,25,10000) // returns -116,535.832
Present value of annuity

To return a positive present value, enter the payment as a negative number:

EXCEL 
=PV(7%,25,-10000) // returns 116,535.832
Investment goal

To calculate the initial investment required to reach $15,000 in 10 years with an annual interest rate of 5%:

EXCEL 
=PV(5%,10,0,15000) // returns -9,208.70
Investment goal

Enter the future value as a negative number to get a positive result:

EXCEL 
=PV(5%,10,0,-15000) // returns 9,208.70

See Also

FV PV RATE NPER PMT PPMT IPMT CUMPRINC