Returns the present value of an annuity based on periodic, constant payments to be paid in the future and a constant interest rate.
PV(rate, nper, pmt[, fv[, type]])
The PV function has these named arguments:
|
Part |
Description |
|
rate |
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 |
Total number of payment periods in the annuity. For example, if you make monthly payments on a four-year car loan, your loan has a total of 4 * 12 (or 48) payment periods. |
|
pmt |
Payment to be made each period. Payments usually contain principal and interest that doesn’t change over the life of the annuity. |
|
fv |
Future value or cash balance you want after you’ve made the final payment. For example, the future value of a loan is $0 because that’s it value after the final payment. However, if you want to save $50,000 for your child’s education over 18 years, then $50,000 is the future value. If omitted, 0 is assumed. |
|
type |
Number indicating when payments are due. Use 0 if payments are due at the end of the payment period, or use 1 if payments are due at the beginning of the period. If omitted, 0 is assumed. |
An annuity is a series of constant cash payments made over a period of time. An annuity can be a loan (such as a home mortgage) or an investment (such as a monthly savings plan).
The arguments rate and nper must be calculated using payment periods expressed in the same units. For example, if rate is calculated using months, nper must also be calculated using months.
For all arguments, cash paid out (such as deposits to savings) is represented by negative numbers; cash received (such as dividend checks) is represented by positive numbers.
In this example, the PV function returns the present value of an $1,000,000 annuity that will provide $50,000 a year for the next 20 years. Provided are the expected annual percentage rate (APR), the total number of payments (TotPmts), the amount of each payment (YrIncome), the total future value of the investment (FVal), and a number that indicates whether each payment is made at the beginning or end of the payment period (PayType). Note that because YrIncome represents cash paid out from the annuity each year, it’s a negative number.
Const ENDPERIOD = 0, BEGINPERIOD = 1 ' When payments are made.= "###,##0.00" ' Define money format.= .0825 ' Annual percentage rate.= 20 ' Total number of payments.= 50000 ' Yearly income.= 1000000 ' Future value.= BEGINPERIOD ' Payment at beginning of month.= PV(APR, TotPmts, -YrIncome, FVal, PayType)"The present value is " & Format(PVal, Fmt) & "."