PV Function

PV Function

Class

Microsoft.VisualBasic.Financial

Syntax

 PV(   rate   ,   nper   ,   pmt   [,   fv   [,   due   ]])

rate (required; Double): The interest rate per period
nper (required; Integer): The number of payment periods in the annuity
pmt (required; Double): The payment made in each period
fv (optional; Double): The future value of the loan or annuity
due (optional; Duedate): Either DueDate.BegOfPeriod or DueDate.EndOfPeriod

Return Value

A Double specifying the present value of an annuity

Description

Calculates the present value of an annuity (either an investment or loan) based on a regular number of future payments of a fixed value and a fixed interest rate.

The present value is the current value of a future stream of equal cash flows discounted at some fixed interest rate.

Rules at a Glance

The time units used for the number of payment periods, the rate of interest, and the payment amount must be the same. In other words, if you state the payment period in months, you must also express the interest rate as a monthly rate and the amount paid per month.
The rate per period is stated as a fraction of 100. For example, 10% is stated as .10. If you are calculating using monthly periods, you must also divide the rate per period by 12. For example, 10% per annum equates to a rate per period of .00833.
The fv argument indicates the future value or cash balance after the last payment. The default is 0, since that reflects the value of a loan after the final payment.
Payments made against a loan or added to the value of savings are expressed as negative numbers .
The due argument states whether the payment is made at the start of a period or at the end (the default value).

Programming Tips and Gotchas

Make sure that nper , rate , and pmt all reflect values for an identical time period. For example, if pmt represents a monthly payment, rate should represent the monthly interest rate, rather than an annual interest rate.