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Financial
The Excel PV function returns the present value — what a stream of future payments or a future lump sum is worth in today’s dollars, the foundation of loan valuation and investment appraisal.
Quick answer:
=PV(6%/12, 5*12, -1000) // about $51,726
Syntax
=PV(rate, nper, pmt, [fv], [type])
| Argument | Description | |
|---|---|---|
rate | Required | Interest rate per period. |
nper | Required | Number of periods. |
pmt | Required | Payment each period. |
fv | Optional | Future value (default 0). |
type | Optional | 0 end (default), 1 start. |
How to use it
What is receiving $1,000/month for 5 years worth today at 6%?
=PV(6%/12, 5*12, -1000) // about $51,726 today
Cash-flow sign convention: money you pay out is negative, money you receive is positive. That is why loan payments and present values often come back negative — wrap in a minus sign or ABS for display.
Try it: interactive demo
Live demo
Change the inputs and watch the result update.
Result:
Practice workbook
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Frequently asked questions
What does present value mean?
Money in the future is worth less than money now; PV discounts future cash flows back to today’s value at a given rate.
PV vs NPV?
PV handles a single constant payment stream; NPV handles a list of varying cash flows.
Why is the result negative or positive?
It follows the sign convention — opposite to the payment sign you entered.
How is PV used to value a loan?
The present value of all scheduled payments equals the loan principal at the loan’s rate.
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