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5 Things You Should Know About PV Function: PV (Rate, Nper, PMT, (FV), (Type) )

The PV function in Excel returns the present value of a series of future payments based on a constant interest rate. It requires the interest rate, number of periods, payment amount, and can also include the future value. The function is available in Excel 2007 and later. It is important to be consistent in how rates and periods are defined when calculating periodic cash flows.

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Tanuja Puri
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34 views8 pages

5 Things You Should Know About PV Function: PV (Rate, Nper, PMT, (FV), (Type) )

The PV function in Excel returns the present value of a series of future payments based on a constant interest rate. It requires the interest rate, number of periods, payment amount, and can also include the future value. The function is available in Excel 2007 and later. It is important to be consistent in how rates and periods are defined when calculating periodic cash flows.

Uploaded by

Tanuja Puri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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PV is an Excel financial function that returns the present value of an annuity, loan or investment based on a co

rate. It can be used for a series of periodic cash flows or a single lump-sum payment.

The PV function is available in all versions Excel 365, Excel 2019, Excel 2016, Excel 2013, Excel 2010 and Excel

The syntax is as follows:

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

Rate (required) - the interest rate per period. If you make yearly payments, indicate an annual interest rate; if
Nper (required) - the total number of payment periods for the length of an annuity.
Pmt (optional) - the amount paid each period. If omitted, it is assumed to be 0, and the
Fv (optional) - the future value of an annuity after the last payment. If omitted, it is assumed to be 0, and the
Type (optional) - when the payments are to be made:
0 or omitted (default) - at the end of a period (regular annuity)
1 - at the beginning of a period (annuity due)

5 things you should know about PV function

For the Excel PV function to work correctly in your worksheets, please take into account these usage notes:

1. If the fv argument is zero or omitted, pmt must be included, and vice versa.
2. The rate argument can be supplied as a percentage or decimal number, e.g. 10% or 0.1.
3. Any money that you pay out (outflow) should be represented by a negative number. Any money that you re
4. When calculating periodic cash flows, be consistent with the rate and nper units. For instance, if you make 5
5. All the arguments must be numeric, otherwise the PV function returns a #VALUE! error.
loan or investment based on a constant interest
a single lump-sum payment.

Excel 2013, Excel 2010 and Excel 2007.

ndicate an annual interest rate; if you pay monthly, specify a monthly interest rate, and so on.

e 0, and the fv argument must be included.


ed, it is assumed to be 0, and the pmt argument must be included.

to account these usage notes:

g. 10% or 0.1.
e number. Any money that you receive (inflow) should be represented by a positive number. For example, when you are i
units. For instance, if you make 5 yearly payments at a 7% annual interest rate, use 5 for nper and 7% or 0.07 for
VALUE! error.
example, when you are investing money into an insurance annuity, use a negative number for pmt. When the insurance
nd 7% or 0.07 for rate. If you make monthly payments for a period of 5 years, then use 5*12 (a total of 60 periods) for
pmt. When the insurance company begins making payouts to you, express payments as positive numbers.
otal of 60 periods) for nper and 7%/12 for rate.
ive numbers.
Suppose you are making regular contributions to build up your savings for retirement. You deposit $500 per
interest rate and will do 50 such payments at equal intervals.

To find the present value of the annuity, set up your worksheet in this way:

Description Argument Value


Periodic interest rate rate 7%
No. of periods nper 100
Periodic payment pmt -$500
Annuity type type 1 0

Present value $7,634.05 ₹ 7,134.63


You deposit $500 per period at a 7%
rvals.
Description Value CompoundPeriods pePresent value
Annual interest rate 7% Weekly 52 -$35,242.70
No. of years 5 Monthly 12 -$35,270.25
Future value $50,000 Quarterly 4 -$35,341.23
Annuity type 0 Semiannual 2 -$35,445.94
Annually 1 -$35,649.31
Present value -$35,649.31

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