Rate
The (fixed) interest rate per period.
NumberOfPeriods
The total number of payment periods in the term.
Payment
The payment made each period. If set to 0, the value of the FutureValue parameter is used instead.
FutureValue
The cash balance to be attained at the end of the term. (With a loan, this would normally be 0 and with a bond, this would be the redemption value.) If omitted, it is assumed to be 0.
Type
0 If payments are made at the end of each period and 1 if payments are made at the start of each period (including a payment at the start of the term). If omitted, it is assumed to be 0.
Returns
The present value of a stream of future payments.
Returns the present value of a stream of future payments, optionally combined with a final lump sum. This is the inverse of FV: given a series of cash flows in the future, PV tells you what they are worth today.
Examples
Returns roughly $-7,508.06. Suppose you can buy an annuity that pays $800 at the end of each year for 12 years, and you assume a constant interest rate of 4%. The annuity is worth roughly $7,508.06 today. The result is negative because you must pay for the annuity.
Returns roughly $12,931.39. Suppose you are considering a loan that requires monthly payments of $250 over five years at 6% annual interest. The present value of those payments is roughly $12,931.39. The payment is negative because you pay it, and the result is positive because the loan proceeds are paid to you.
Returns roughly $-2,717.01. Consider a four-year bond that pays $150 semi-annually and $2,000 on maturity. An annual rate of return of 5% is required (compounded semi-annually). The bond is valued at roughly $2,717.01 on issue. The result is negative because you pay for the bond.