PV (Rate,Nper,Pmt)

Description:

This function returns the present value of an investment. The present value is the total amount that a series of future payments is worth now. For example, when you borrow money, the loan amount is the present value to the lender.

Syntax: PV (Rate, Nper, Pmt) ;
             PV (Rate, Nper, Pmt, Fv) ; or
             PV (Rate, Nper, Pmt, Fv, Type)

• Rate : is the interest rate per period. For example, if you obtain an automobile loan at a 10 percent annual interest rate and make monthly payments, your interest rate per month is 10%/12, or 0.83%. You would enter 10%/12, or 0.83%, or 0.0083, into the formula as the rate.
• Nper : is the total number of payment periods in an annuity. For example, if you get a four-year car loan and make monthly payments, your loan has 4*12 (or 48) periods. You would enter 48 into the formula for nper.
• Pmt : is the payment made each period and cannot change over the life of the annuity. Typically, pmt includes principal and interest but no other fees or taxes. For example, the monthly payments on a $10,000, four-year car loan at 12 percent are $263.33. You would enter -263.33 into the formula as the pmt. If pmt is omitted, you must include the fv argument.
• Fv : is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (the future value of a loan, for example, is 0). For example, if you want to save $50,000 to pay for a special project in 18 years, then $50,000 is the future value. You could then make a conservative guess at an interest rate and determine how much you must save each month. If fv is omitted, you must include the pmt argument.
• Type : is the number 0 or 1 and indicates when payments are due. If type is omitted, it is assumed to be 0.

Remarks

• Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at 12 percent annual interest, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12% for rate and 4 for nper.
• An annuity is a series of constant cash payments made over a continuous period. For example, a car loan or a mortgage is an annuity. For more information, see the description for each annuity function.
• For all the arguments, cash you pay out, such as deposits to savings, is represented by negative numbers; cash you receive, such as dividend checks, is represented by positive numbers.

Example

The PV function can be used in any database where you have stored values pertaining to rate of the investment, the payment period, the amount of payment, the future value of the investment and the type of the investment which indicates when the payment is due. The function reads these options and calculates the value for FV depending upon the parameters that are supplied. The function can be built with either the 3 compulsory parameters, or then the 2 optional parameters can be added one by one or both together. This function returns the calculated numeric value as its result.

Example 1: PV (Rate, Nper, Pmt)

=PV (9, 3, -1150)	-returns the value for FV (127.65)
=PV (10, 6, -22150)	-returns the value for FV (2215)
=PV (9, 4, -9900, )	-returns the value for FV (1099.89)

 

Let us take the example of a database in PowerOLAP called "Effective Finance" where we have values for rate, the number of payment cycles and the payment value. We shall use this example in this case to find the value for PV by calculating the PV based on the parameters supplied.



In the example above, we wish to calculate the value which will determine the Present Value of an investment depending on the rate of interest, the number of payments in an annuity and the value of those payments. The formula above writes values into the "InvestmentPlanningModel" cube to the "FinancialDataFunctions" dimension into the member named "PV" by creating the appropriate value for this member, based upon the parameters that are given as input to this function, namely the references for the members "RATE", "NPER", and "PMT". The result is returned by calculating the FV from all these parameters and the calculated numeric value is the result that is returned by the function.

 
 

Example 2: PV (Rate, Nper, Pmt, Fv)

=PV (4, 2, -11100, -800)	-returns the value for PV (2696)
=PV (9, 4, -12900, -100)	-returns the value for PV (1433.20)
=PV (10, 2, -15500, -300)	-returns the value for PV (1539.67)

 

Let us take the example of a database in PowerOLAP called "Effective Finance" where we have values for rate, the number of payment cycles and the payment value. We shall use this example in this case to find the value for PV by calculating the parameters supplied to the function which are the reference for the rate of the investment, the number of payment cycles in an annuity, the payment amount due and the future value of the investment.



The formula above writes values into the "InvestmentPlanningModel" cube to the "FinancialDataFunctions" dimension into the member named "PV2" by creating the appropriate value for this member, based upon the parameters that are given as input to this function, namely the references for the members "RATE", "NPER", "PMT" and "FV. The result is returned by calculating the PV from all these parameters and the calculated numeric value is the result that is returned by the function.

 
 

Example 3: PV (rate, nper, pmt, fv, type)

=PV (4, 2, -1100, -800, 1)	-returns the value for PV (13352)
=PV (9, 4, -11700, -100, 1)	-returns the value for PV (12998.71)
=PV (10, 2, -15500, -300, 1)	-returns the value for PV (16911.57)

 
 

Let us take the example of a database in PowerOLAP called "Effective Finance" where we have values for rate, the number of payment cycles and the payment  value. We shall use this example in this case to find the value for PV by calculating the parameters supplied to the function which are namely the reference for the rate of the investment, the number of payment cycles in an annuity, the payment amount due, the future value of the investment and finally the type of the investment.



The formula above writes values into the "InvestmentPlanningModel" cube to the "FinancialDataFunctions" dimension into the member named "PV3" by creating the appropriate value for this member, based upon the parameters that are given as input to this function, namely the references for the members "RATE", "NPER", "PMT" and "FV" and "TYPE". The result is returned by calculating the PV from all these parameters and the calculated numeric value is the result that is returned by the function.