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PV

The PV function in Google Sheets allows you to calculate the present value of an annuity investment based on constant-amount periodic payments and a constant interest rate. This function is useful for financial analysis and decision-making.

Function Syntax and Parameters

Syntax: PV(rate, number_of_periods, payment_amount, [future_value], [end_or_beginning])

Parameters:

  • rate: The interest rate per period.
  • number_of_periods: The total number of payment periods.
  • payment_amount: The amount of each payment made per period.
  • future_value [Optional]: The future value remaining after the last payment is made. If omitted, it is assumed to be 0.
  • end_or_beginning [Optional]: Specifies whether payments are due at the end or beginning of each period. If omitted, it is assumed to be "end".

Step-by-Step Tutorial

To calculate the present value of an annuity investment using the PV function, follow these steps:

  1. Determine the interest rate per period.
  2. Determine the total number of payment periods.
  3. Determine the amount of each payment made per period.
  4. Determine the future value remaining after the last payment is made (if applicable).
  5. Determine whether payments are due at the end or beginning of each period (if applicable).

Once you have these values, you can use the PV function with the appropriate parameters to calculate the present value.

Use Cases and Scenarios

The PV function is useful in various financial scenarios, such as:

  1. Retirement planning: Calculating the present value of periodic contributions to savings.
  2. Loan analysis: Determining the present value of loan payments.
  3. Investment evaluation: Assessing the present value of future cash flows from an investment.

Related Functions

  • FV: Calculates the future value of an investment based on periodic payments and a constant interest rate.
  • RATE: Calculates the interest rate per period for an annuity investment based on constant-amount periodic payments and a constant present value.
  • NPV: Calculates the net present value of an investment based on a series of periodic cash flows and a discount rate.

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