Excel PV Function

PV calculates the present value of equal periodic payments, a future lump sum, or both, using a constant rate.

Use it to value a stream of equal payments, discount a single future amount, or calculate how much you could afford to borrow based on your repayment budget, interest rate, and loan term.

1
Set the rate and number of periods Use a constant rate per period and a matching period count.
2
Enter the future payments Specify an equal payment each period, a final lump sum, or both. Choose whether periodic payments occur at the beginning or end.
3
Calculate their value today PV discounts the future cash flows to their present value.

PV syntax & arguments

Syntax

=PV(rate, nper, pmt, [fv], [type])
Required Optional
  1. 1

    rate

    Required

    The constant interest or discount rate per period. For monthly periods, divide a nominal annual rate compounded monthly by 12. If the annual rate is effective, use (1+annual_rate)^(1/12)-1 instead.

  2. 2

    nper

    Required

    The total number of periods. This should correspond to the rate period. For instance, use months with a monthly rate or years with an annual rate.

  3. 3

    pmt

    Required

    The fixed payment each period. Use a negative amount for money paid out, or 0 when discounting only a future lump sum.

  4. 4

    fv

    Optional

    The balance or lump sum at the end of the final period. Defaults to 0. Use the same cash-flow sign convention as pmt.

  5. 5

    type

    Optional

    When periodic payments occur. Defaults to 0. This changes payment timing, not the date of fv.

    • 0: Payments at the end of each period.
    • 1: Payments at the beginning of each period.

Example

=PV(10%,2,0,-1210)

Return the present value of a 1210 payment due in two years, given a constant annual interest rate of 10% and no periodic payments.

PV caveats

  • Cash-flow signs determine the result

    Money received and money paid out have opposite signs. =PV(10%,2,0,-1210) returns 1000; a positive future amount returns a negative present value.

  • Rate and periods must use matching units

    For 36 monthly payments at a nominal annual rate of 6% compounded monthly, use 6%/12 for rate and 36 for nper. Entering 6% directly would apply 6% every month. If 6% is an effective annual rate, use (1+6%)^(1/12)-1 instead. For comparison, 1% per month compounds to about 12.68% per year.

  • Payment timing changes the value

    Omitted type or 0 means end-of-period payments; 1 means beginning-of-period payments. Earlier payments have a higher present value at a positive rate. The fv amount always stays at the end of the final period.

  • A lump sum needs a zero payment

    To discount a single future amount, enter 0 for pmt and put the amount in fv. Putting it in pmt would repeat that amount every period.

  • Payments and rate stay constant

    PV assumes equally spaced, equal payments and one rate for all periods. A changing payment schedule needs each cash flow discounted separately.

  • Zero interest means no discounting

    At rate=0, PV returns 0-(pmt*nper+fv). For example, =PV(0,3,-200,-1500) returns 2100, regardless of payment timing.

Building a cash-flow model? Discount each future amount with =PV(rate,period,0,-amount), then use SUM to combine the present values.

Intro PV practice problem

Solve the intro problem directly here, or open it on its own page.

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Intro Money Today Pro problem

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Advanced PV practice problems

Use PV alongside other Excel functions in realistic, less-prescriptive challenges.

No advanced PV problems are currently available.