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How to calculate present value in Excel and Google Sheets
Topic:Finance basicsExcel & Google Sheets
=PV(B2/12,C2,-D2,-A2)✓
Verified example
Computed by a real spreadsheet engine on the sample data below.
| Future Value | Annual Rate | Months | Monthly Pmt | Present Value |
| 10000 | 0.05 | 60 | 0 | |
| 5000 | 0.06 | 36 | 0 | |
| 20000 | 0.08 | 120 | 0 | |
| 8000 | 0.04 | 24 | 0 |
=PV(B2/12,C2,-D2,-A2)→7792.0539031697
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Step by step
- 1Set up columns: Future Value (A), Annual Discount Rate (B, as decimal), Number of Months (C), and Monthly Payment (D, or 0 if none).
- 2Enter =PV(B2/12,C2,-D2,-A2) in the Present Value column. Rate is divided by 12 for monthly discounting. Negating FV and PMT returns a positive present value.
- 3Format the result as Currency. The number represents what the future cash flows are worth today.
Tips
- For a lump-sum future payment with no periodic payments, simplify to =PV(B2/12,C2,0,-A2) where A2 is the lump sum.
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Frequently asked
How is PV different from NPV?
PV assumes equal cash flows each period. NPV (Net Present Value) handles unequal cash flows spread across multiple periods.
What discount rate should I use?
Use a rate that reflects the opportunity cost of capital — often the expected return on an alternative investment or the cost of borrowing.
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