A 3 year bond is issued, paying 100 currency units semiannual coupons and 1000 currency units on maturity. The monthly payment is negative because you pay it, and the result positive because the loan is paid to you. On this basis, the loan is only worth 3,336.57, so might be a poor deal. You assume a constant interest rate of 5%. You are considering a loan of 3,500, which would mean you paying back 100 at the end of each month for 3 years. The result is negative, because you must pay for the annuity. On this basis, the annuity is worth 10,379.66 today if it is priced higher than this you might not wish to buy it. You have the opportunity to buy an annuity, which would pay you 1000 at the end of each year for 15 years. See Derivation of Financial Formulas for the underlying formula. The examples below clarify how the function may be used. PV returns the value today, of a payment being made each period for numperiods periods, with an additional lump sum payment ( futurevalue) at the end of the term, at fixed rate interest, compounded each period. The value of money is time-dependent for example, $100 today would be worth $110 in a year if invested at a 10% interest rate. Type: when payments are made (optional - defaults to 0):ġ - at the start of each period (including a payment at the start of the term). With a loan, this would normally be 0 with a bond this would be the redemption value. If futurevalue is given, this may omitted (defaults to 0).įuturevalue: the cash balance you wish to attain at the end of the term (optional - defaults to 0). Numperiods: the total number of payment periods in the term. PV(rate numperiods payment futurevalue type) rate: the (fixed) interest rate per period. Returns the present value of a stream of future payments with a final lump sum.