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PV of a lump sum


Posted by m. carter on October 23, 2001 10:26 AM

I'm able to use the PV formula to determine the present value of a stream of payments (annuity) but I can't figure out how to calc PV of a lump sum w/o looking at a PV table.

for example:

FV = 100,000
10 years
4%

PV = 100,000 * .67556 = 67,556

thanks


Posted by Barrie Davidson on October 23, 2001 10:33 AM

=100000/(1+4%)^10

Regards,
Barrie

Posted by IML on October 23, 2001 10:34 AM

You could use
=PV(0.04,10,,100000)

of course if it monthly reinvestment,
=PV(0.04/12,10*12,,100000)
would be a little more accurate.

Posted by m.carter on October 23, 2001 10:45 AM

thanks IML - what's the significance of using the double comma after the period? - I can't find any "help" in MS help.

thanks again.

Posted by Mark W. on October 23, 2001 10:51 AM

He's excluding the optional, "Pmt" argument --
"the payment made each period". See the Excel
Help Index topic for "PV worksheet function".

Posted by IML on October 23, 2001 10:53 AM

There are five arguments in the function. The double comma skips over (or defaults to zero) the payment field, and allows the amount to go in the optional future value field. Click on the equals sign in the formula bar for a look when you are in the cell. IML - what's the significance of using the double comma after the period? - I can't find any "help" in MS help. again.