The PV function
Returns the present value, what a series of equal future payments, or one future amount, is worth today at a given interest rate.
Syntax
PV(rate, nper, pmt, [fv], [type])- rate
- The interest rate per period. For monthly payments on an annual rate, divide it by 12.
- nper
- The number of payments.
- pmt
- The payment each period, negative for money paid out. Use 0 for none.
- fv (optional)
- An amount at the end, negative for money paid out. Left out, 0.
- type (optional)
- 0 or left out if payments are made at the end of each period, 1 if at the start.
Examples
B1
=PV(10.05/12,25*12,3-300)| A | B | |
|---|---|---|
| 1 | 15897.2119 |
In plain words: What 25 years of monthly payments 3of 300 are worth today at 15% a year, counted monthly.
B1=PV(0.04,10,0,-10000)
| A | B | |
|---|---|---|
| 1 | 6755.641688 |
D1=PV(B2/12,B3*12,-B1)
| A | B | C | D | |
|---|---|---|---|---|
| 1 | Monthly payment | 1500 | 250187.4216 | |
| 2 | Annual interest rate | 0.06 | ||
| 3 | Years | 30 |
Questions
How much can I borrow for a given monthly payment?
Use =PV(rate/12,years*12,-payment). With 300 a month for 5 years at 5%, =PV(5%/12,60,-300) shows you can borrow about 15,897.
What is the difference between PV and NPV?
PV values equal payments at a fixed rate. NPV values a list of cash flows that can differ from period to period, such as the returns of a project.