# Present value of annuity

=PV(rate,periods,payment,0,0)

To get the present value of an annuity, you can use the PV function. In the example shown, the formula in C9 is:

=PV(C5,C6,C4,0,0)

The PV function is a financial function that returns the present value of an investment. You can use the PV function to get the value in today's dollars of a series of future payments, assuming periodic, constant payments and a constant interest rate. An annuity is a series of equal cash flows, spaced equally in time

In this example, an annuity pays 10,000 per year for the next 25 years, with an interest rate (discount rate) of 7%. The PV function is configured as follows in cell C9:

=PV(C5,C6,C4,0,0)

The inputs to PV are as follows:

**rate**- the value from cell C7, 7%.**nper**- the value from cell C8, 25.**pmt**- the value from cell C6, 100000.**fv**- 0.**type**- 0, payment at end of period (regular annuity).

With this information, the present value of the annuity is $116,535.83. Note payment is entered as a negative number, so the result is positive.

### Annuity due

With an annuity due, payments are made at the beginning of the period, instead of the end. To calculate present value for an annuity due, use 1 for the *type* argument. In the example shown, the formula in F9 is:

=PV(F7,F8,-F6,0,1)

Note the inputs (which come from column F) are the same as the original formula. The only difference is *type* = 1.

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