PV Function

Description

Returns the present value of an annuity based on periodic, constant payments to be paid in the future and a constant interest rate.

Syntax

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

Remarks

An annuity is a series of constant cash payments made over a period of time.  An annuity can be a loan (such as a home mortgage) or an investment (such as a monthly savings plan).

The PV function uses the following numeric arguments:

Argument     Description

rate               Interest rate per period.  For example, if you get a car loan at an annual percentage rate (APR) of 10 percent and make monthly payments, the rate per period is 0.1/12, or 0.0083.

nper               Total number of payment periods in the annuity.  For example, if you make monthly payments on a four-year car loan, your loan has a total of 4 * 12 (or 48) payment periods.

pmt                Payment to be made each period.  Payments usually contain principal and interest that doesn't change over the life of the annuity.

fv                  Future value or cash balance you want after you've made the final payment.  The future value of a loan, for instance, is \$0.  As another example, if you will need \$50,000 in 18 years to pay for your child's education, then \$50,000 is the future value.

due                Number indicating when payments are due. Use 0 if payments are due at the end of the payment period, and use 1 if payments are due at the beginning of the period.

The arguments rate and nper must be calculated using payment periods expressed in the same units.  For example, if rate is calculated using months, nper must also be calculated using months.

For all arguments, cash paid out (such as deposits to savings) is represented by negative numbers; cash received (such as dividend checks) is represented by positive numbers.

Distribution Note   When you create and distribute applications that use any of the financial functions, you should install the file MSAFINX.DLL in the customer's Microsoft Windows \SYSTEM directory.  The Visual Basic Setup Kit provides tools to help you write setup programs that install your applications.