Join Curt Frye for an in-depth discussion in this video PV: Calculating the present value of an investment, part of Excel 2010: Financial Functions.
Calculating the present value of an investment lets you answer this question.…How much is the proposed investment worth in today's dollars?…You can answer that question using the PV or present value function.…The PV function has five arguments the first argument is the rate and that is…simply the annual percentage rate.…Then the second is the number of periods and in this case we're assuming that we…have interest that is compounded annually and that we have a three-year…investment so the number of periods is 3.…Next is the payment and that is $250 per year and in this case we're…assuming that the payment is a negative number, because it is an outflow from your account.…
So that's why the number appears in parentheses.…The next argument is the future value and that is $10,000 and that is the amount…you'll receive at the end of the investment term and then finally we have type.…Type can be either 1 or 0.…If you type in 1 then you are making your payments at the beginning of an…investment period such as at the beginning of the year on January 1, or if it's…
- Analyzing loans, payments, and interest
- Discovering the interest rate of an annuity
- Determining depreciation using the straight line, declining balance, double-declining balance, and other methods
- Calculating the future value of an investment with variable returns
- Finding the discount rate of a security
- Converting between fractional prices and decimal prices
- Determining the yield of securities that pay interest periodically
Skill Level Intermediate
Q: Where can I learn more about Excel formulas?
A: Discover more on this topic by visiting Excel formulas on lynda.com.
Managing and Analyzing Data in Excel 2010with Dennis Taylor1h 32m Appropriate for all
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 5s
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