Using the Excel PV Function to Compute Present Value of Investments
Use the Excel spreadsheet PV function to compute the present value of a future stream of payments.
Here are three examples that show you how to use the PV function.
Example 1: Fixed Annuity - $1,200 Annual Payment for 15 Years
To calculate the present value of a fixed annuity, enter the interest rate, number of periods, payment amount (enter negative value), cash balance after the last payment and when a payment is made.
In a cell of an Excel spreadsheet enter:
=PV(.06,15,-1200,0,0)
Excel returns:
$11,654.70
So the value today of receiving annual payments of $1,200 for 15 years is $11,654.70.
Example 2: Fixed Annuity - $100 Monthly Payment for 15 Years
To calculate the present value of a fixed annuity, enter the interest rate, number of periods,payment amount (enter negative value), cash balance after the last payment and when a payment is made.
In a cell of an Excel spreadsheet enter:
=PV(.005,180,-100,0,0)
Excel returns:
$11,850.35
In this example the annual interest rate and number of payments are adjusted to monthly values. The 6% annual interest rate is divided by 12 and the monthly payments are 15 multiplied by 12.
Example 3: Fixed Annuity - $100 Monthly Payment for 15 Years With $1,000 Cash Balance
Enter -1000 as the required cash balance after the last payment is made.
In a cell of an Excel spreadsheet enter:
=PV(.005,180,-100,-1000,0)
Excel returns:
$12,257.83
Related Calculator and Functions
Ordinary Annuity Calculator - Present Value
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