# Excel PV function

## Summary

The Excel PV function calculates the present value (or original amount) of a loan or investment. The function assumes constant payments (or cashflow if an investment) will be made. The PV function is an Excel financial function.

## Function

=PV(rate, nper, pmt, [fv], [type])

## Arguments (inputs)

rate = the interest rate

nper = the number of periods (term of the loan, e.g., years, months)

pmt = the payment per period

fv = [optional] the future value of the loan. If left blank it will default to 0.

type = [optional] 1 = payment at the beginning of the period, 0 = payment at the end of the period, if omitted it will default to end of period

Note: the pmt and nper inputs should be aligned, meaning that if the nper is entered in years, the pmt should be an annual payment.

## Return value

The PV function returns the present value (or current value) for a loan or investment with constant payments or cashflow.

## Example

In the example above the PV function calculates the present value (original loan amount) for a loan with the terms listed in cells C5, C7, and C9. In this example, the loan annual payment is \$280, the term is 5 years, and the interest rate is 7%. Zero is entered for fv (future value) because at the end of the loan the loan will be paid off.

=PV(C9, C7, -C5, 0)

Note: A minus sign “-” is entered before the pmt argument (C5) because the payment is a negative cashflow (a payment from you to someone else). If a minus sign is not entered the PV function will still work but the result will return a negative PV.

The result returned is \$1,148.06, which is the loan amount or present value.