Chapter 12. Working with Financial Formulas
Calculate the Present Value of an Investment
You can use the PV function in Excel to help you determine the present value of an investment. Suppose you win a prize and you are offered $5,000 today or equal payments of $100 per month for five years at an interest rate of 8% compounded annually. Which should you choose? The PV function can tell you and the organization offering the prize whether $5,000 today is less than, equal to, or greater than the value of $100 per month for five years at an interest rate of 8% compounded annually. You can use the PV function to calculate the value of an annuity or to determine how much you will pay overall if you make a series of loan payments.
The PV function requires ...