PV Function

Description

The function PV returns a value specifying the present value of an annuity based on periodic, fixed payments to be paid in the future and a fixed interest rate.

Syntax

PV (Rate, NPer, Pmt)

PV (Rate, NPer, Pmt, FV)

PV (Rate, NPer, Pmt, FV, Due)

Required Parameters

Rate

The interest rate per period. For example, if you get a car loan at an annual percentage rate (APR) of 10 percent and make monthly payments, the rate per period is 0.1/12, or 0.0083.

NPer

The total number of payment periods in the annuity. For example, if you make monthly payments on a four-year car loan, your loan has 4 x 12 (or 48) payment periods.

Pmt

The payment to be made each period. Payments usually contain principal and interest that does not change during the life of the annuity.

Optional Parameters

FV

The future value or cash balance you want after you make the final payment.

For example, the future value of a loan is $0 because that is its value after the final payment. However, if you want to save $50,000 over 18 years for your child's education, then $50,000 is the future value.

If omitted, 0 is assumed.

 

Due

Value that specifies when payments are due. This argument must be either 0 if payments are due at the end of the payment period, or 1 if payments are due at the beginning of the period.

If omitted, 0 is assumed.