Present Value
– PV
The present value of an investment or an annuity can be calculated using Excel's PV
function. See the table below for a detailed list of the exercises and problems in the text
that can be solved using this function.
Syntax
=PV(rate,number of periods,payment,present value,type)
Rate – Interest rate
Number of periods – term of investment
Payment – periodic payments where individual amounts are the same
Future Value – value of the investment at end of term (0 if omitted)
Type – when payment is to be made
0 – at end of period (assumed if left blank)
1 – at beginning of period
General Example
The following general example shows how the PV function can be used. Notice that the
PV function appears in the formula bar.
Using the PV Function in a Spreadsheet
1
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To calculate the present value of an investment or an annuity, create a spreadsheet by
following Steps 1 to 7. Or, to use the PV function right away, open the FV worksheet in
the Excel Functions Templates workbook. All fields have been formatted for you
(currency, percentage, number of decimal displayed).
Step 1
: In cell A1 enter
PV Function
. You will replace
PV Function
with your project
title when you use your spreadsheet for a particular question or situation.
Step 2
: In cell A3 enter
Interest Rate per Compounding Period
.
In cell A4 enter
Total Number of Compounding Periods
.
In cell A5 enter
Payment or Deposit per Compounding Period
.
In cell A6 enter
Future Value
.
In cell A7 enter
Type (Ordinary or Due)
.
In cell A8 enter
Answer
.
Step 3
: Leave cells B3 to B7 empty. You will place values in these cells later.
Step 4
: Select cell B8, and then click the Paste Function button
fx
on the Toolbar. In the
Function Category list, click on
All
. In the Function Name list, click on
PV
, then
click
OK
.
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 Fall '05
 TonyCirusolo
 Math, Negative and nonnegative numbers, General Example

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