Computes 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)
payment | is the regular payment made, |
interest | is the rate of interest per period the payments will receive, |
term | is the length of the investment in periods. |
The following formula underlies the PV
function:
present value = 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).