From the course: Excel: Analyzing and Visualizing Cash Flows

Unlock the full course today

Join today to access over 22,600 courses taught by industry experts or purchase this course individually.

Calculate the present value of an investment

Calculate the present value of an investment

From the course: Excel: Analyzing and Visualizing Cash Flows

Start my 1-month free trial

Calculate the present value of an investment

“

- [Instructor] Calculating the present value of an investment enables you to answer this question. How much is a proposed investment worth today? You can answer that question using the PV, or present value function. I'll demonstrate how to perform this calculation using the present value workbook. You can find it in the chapter one folder of the exercise files collection. To calculate the present value, you need to know several bits of information. The first is the annual interest rate, which I have in cell B3. We're assuming it's 5%. When we perform our calculation, I'm going to assume that interest is compounded monthly, so we'll need to divide the rate by 12. The number of periods is 120 and because again we are assuming that we have monthly compounding, that means it's 120 months or 10 years. Payment is in the ongoing payment. That would go into the investment. In this case we're assuming it's zero, and then the future value is what we are going for as an investment goal. Either…

Contents