# Using the Excel PV Function to Compute Present Value of Investments

Use the Excel spreadsheet PV function to compute the present value of a future stream of payments.

Here are three examples that show you how to use the PV function.

**Example 1: Fixed Annuity - $1,200 Annual Payment for 15 Years**

To calculate the present value of a fixed annuity, enter the interest rate, number of periods, payment amount, cash balance after the last payment and when a payment is made.

In a cell of an Excel spreadsheet enter:

=PV(.06,15,-1200,0,0)

Excel returns:

$11,654.70

So the value today of receiving annual payments of $1,200 for 15 years is $11,654.70.

The parameters of the PV function are:

PV
Parameters |
||

Parameter |
Value |
Comment |

Interest rate |
.06 |
Annual interest rate. Adjust annual interest rate if investments are monthly or some other interval. |

Number years |
15 |
Number of payments. |

Payment Amount |
-1200 |
Payment. Make negative to show positive PV. |

Future Value |
0 |
Future value or cash balance after last payment. Make negative if Payment is negative |

When invested |
0 |
A 1 indicates the investment is made at the beginning of the period. A 0 indicates the investment is made at the end of the period. Investments made at the beginning of the period yield more money. |

Example 2: Fixed Annuity - $100 Monthly Payment for 15 Years

To calculate the present value of a fixed annuity, enter the interest rate, number of periods, payment amount and when payment is made.

In a cell of an Excel spreadsheet enter:

=PV(.005,180,-100,0,0)

Excel returns:

$11,850.35

In this example the annual interest rate and number of payments are adjusted to monthly values. The 6% annual interest rate is divided by 12 and the monthly payments are 15 multiplied by 12.

**Example 3: Fixed Annuity - $100 Monthly Payment for 15 Years With $1,000 Cash Balance**

Enter -1000 as the required cash balance after the last payment is made.

In a cell of an Excel spreadsheet enter:

=PV(.005,180,-100,-1000,0)

Excel returns:

$12,257.83

**Related Articles and Calculators**

Ordinary Annuity Calculator - Present Value

Using the Excel FV Function to Compute Future Value of Investments

Using the Excel POWER Function to
Compute Investment Returns