Present and Future Value With PV and FV
Find what money is worth now versus later.
Money Has a Time Value
A dollar today is worth more than a dollar next year, because today's dollar can earn interest. This idea is called the time value of money.
Two functions capture it. PV (present value) tells you what a future stream of money is worth right now. FV (future value) tells you what money today will grow into later.
They are mirror images of each other.
The FV Syntax
Future value uses =FV(rate, nper, pmt, [pv], [type]).
- rate — interest rate per period.
- nper — number of periods.
- pmt — the payment made each period (0 if none).
- pv — optional starting lump sum.
- type — optional, 0 for end, 1 for start of period.
You must include pmt even when it is zero, because pv comes after it.
=FV(rate, nper, pmt, pv)All lessons in this course
- Loan Payments With PMT
- Present and Future Value With PV and FV
- Evaluating Projects With NPV
- Return Rates With IRR