The Excel PV Function

Related Functions:
FV Function
NPV Function

Basic Description

The Excel PV function calculates the Present Value of an investment, based on a series of future payments.

The syntax of the function is :

PV( rate, nper, pmt, [fv], [type] )

Where the arguments are as follows:

rate - The interest rate, per period
nper - The number of periods for the lifetime of the annuity or investment
pmt -

An optional argument that specifies the payment per period

(if the pmt argument is omitted, the [fv] argument must be supplied)
[pv] -

An optional argument that specifies the future value of the annuity, at the end of nper payments

if the [fv] argument is omitted, it takes on the default value 0.
[type] -

An optional argument that defines whether the payment is made at the start or the end of the period.

The [type] argument can have the value 0 or 1, meaning:
0   -   the payment is made at the end of the period
1   -   the payment is made at the beginning of the period
If the [type] argument is omitted, it takes on the default value of 0 (denoting payments made at the end of the period).

Cash Flow Convention :

Note that, in line with the general cash flow convention, outgoing payments are represented by negative numbers and incoming payments are represented by positive numbers. This is seen in the examples below.

Excel Pv Function Examples

The spreadsheets below show examples of the Excel Pv function. In each case, the format of the function is shown in the spreadsheet on the left and the result is shown in the spreadsheet on the right.

Example 1

The following spreadsheet shows the Excel Pv function used to calculate the present value of an annuity that pays $1,000 per month for a period of 5 years. The interest is 5% per year and each payment is made at the end of the month.

 Formulas:
Example of use of the Excel Pv Function
 Results:
Excel Pv Function Result

Note that, in this example :


Example 2

The example below shows the Excel Pv function used to calculate the present value of an annuity that pays $2,000 per quarter for a period of 4 years. The interest is 10% per year and each payment is made at the start of the quarter.

 Formulas:
Example of use of the Excel Pv Function
 Results:
Excel Pv Function Result

Note that, in this example :


Further details and examples of the Excel Pv function are provided on the Microsoft Office website.


Pv Function Errors

If you get an error from the Excel Pv Function, this is most likely to be the #VALUE error:

Common Errors
#VALUE! - Occurs if any of the supplied arguments are non-numeric
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