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%. To calculate present value, the PV function is configured 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.
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:
To get the present value of an annuity, you can use the PV function. In the example shown, the formula in C7 is: = FV ( C5 , C6 , - C4 , 0 , 0 ) Explanation An annuity is a series of equal cash flows, spaced equally in time. In this example, a $5000...
This simple example shows how present value and future value are related. In the example shown, Years, Compounding periods, and Interest rate are linked in columns C and F like this: F5 = C9 F6 = C6 F7 = C7 F8 = C8 The formula to calculate future...
The Excel 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...
The Excel FV function is a financial function that returns the future value of an investment. You can use the FV function to get the future value of an investment assuming periodic, constant payments with a constant interest rate.
Excel Formula Training
Formulas are the key to getting things done in Excel. In this accelerated training, you'll learn how to use formulas to manipulate text, work with dates and times, lookup values with VLOOKUP and INDEX & MATCH, count and sum with criteria, dynamically rank values, and create dynamic ranges. You'll also learn how to troubleshoot, trace errors, and fix problems. Instant access. See details here.