Present Value Formula PV() - Excel

Let´s follow with the financial examples. Now we will analize one of the basic relations, that of the present value of future payments.

Present Value 

The next example allows to calculate and understand the outcome of the Present Value formula PV . For example shows through a chart, the items included in the formula. the sequence of periodic payments and the possible inclusion of a payment made in the last period. The results coincide with those that can be obtained by deducting the exercise period to period values. Additionally, the chart can be updated to represent the exercise. For convenience the example model supports up to 120 times, depending on the user that can be monthly, quarterly or annually. The only consideration to be taken is to match the frequency of payments with the interest rate. Finally, the last argument to be considered by the formula, said the convention on the timing of periodic payments are made, you can take the value zero for periodic payments executed at the end of the period, and one if a periodical payments are made at the beginning of period. In either option, the final payment is considered as the definition says, at the END of the last period. 

NOTE: Enable Macros in order to update the graph automatically according to the number of periods.


Excel 2007 Version

Excel 2003-02 Version

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