Calculates the present value of a series of equal payments discounted at a periodic interest rate for a term.
Syntax:
PV(payment:Number, interest:Number, term:Number)
where:
payment | is the regular payment made; |
interest | is the rate of interest per period the payments will receive; |
term | is the term of the investment (number of periods). |
Formula:
PV = payment × ( (1 − (1 + interest)−term) ÷ interest )
Example:
If you invested £2000 a year for 30 years, which could earn 12% interest, what is the present value of the investment?
The formula
PV(2000, 0.12, 30)
returns the number 16110.37
(pounds).