by The PV function in Excel is used to calculate the present value of an investment based on a series of regular payments and a constant interest rate. The function syntax is:
Syntax
=PV(rate, nper, pmt, [fv], [type])
Arguments
rate – The interest rate per period.
nper – The number of payment periods.
pmt – The payment made each period (EMI).
fv – [optional] Future value. If omitted, defaults to zero.
type – [optional] Payment type, 0 = end of period, 1
For example, to calculate the present value of an investment that pays $100 at the end of each month for 5 years, with an annual interest rate of 6%, and a future value of $5000, the formula would be:
=PV(6%/12, 5*12, -100, 5000, 0)
Note that the payment value is negative because it represents an outflow of cash. The future value and type arguments are included as 5000 and 0, respectively. The result would be the present value of the investment at the beginning, which would be the amount you would need to invest today to achieve the future value of $5000 after 5 years.
