Excel Functions Used in Time Value of Money1

Name of the
Function
PV

Syntax

Comments

=pv(rate,nper,pmt,fv,type).
This function is used to find the present value of annuity.
If you want the final answer to be positive, then enter
pmt as a negative number. If you want to skip the fv
but enter type as 1, then the function must be entered as
=pv(rate,nper,pmt,,type)

Here rate stands for the rate of interest per time period; nper
stands for the number of periods; pmt stands for the value of
annuity; fv stands for the future value other than the annuities
(lets say you pay Rs.1000 per month for 60 months and at the
end of the 60 months pay another Rs.10,000, then fv will be
Rs.10,000, whereas pmt will be Rs.100), and type takes a
value of 1 if it is an annuity due.
This function is mostly used to find the present value of a loan.
Here rate stands for the rate of interest per time period; nper
stands for the number of periods; pmt stands for the value of
annuity; pv stands for the present value other than the annuities
(lets say you pay Rs.10,000 now and pay Rs.100 per month for
60 months, then pv will be Rs.10,000, whereas pmt will be
Rs.100), and type takes a value of 1 if it is an annuity due.
This function can be used to find the future value of a recurring
deposit.
Here rate stands for the rate of interest per time period; nper
stands for the number of periods; pv stands for the present
value other than the annuities, fv stands for the future value of
the annuities, and type takes a value of 1 if it is an annuity due.
This function is usually used to find the EMI of a loan. Usually,
between fv and pv, one of the numbers will be zero.

FV

=fv(rate,nper,pmt,pv,type).
This function is used to find the future value of annuity.
If you want the final answer to be positive, then enter
pmt as a negative number. If you want to skip the pv
but enter type as 1, then the function must be entered as
=fv(rate,nper,pmt,,type)

PMT

=pmt(rate,nper,pv,fv,type)
This function is used to find the value of annuity, the
present value or future value of which is known.

1 This handout has been prepared by Prof. Pitabas Mohanty of XLRI, Jamshedpur.

RATE

=rate(nper,pmt,pv,fv,type,guess)
This function is used to find the implied interest rate in a
problem, where either the present value or the future
value of a series of annuities is known.

Here nper stands for the number of periods; pv stands for the
present value of the annuities, fv stands for the future value of
the annuities, and type takes a value of 1 if it is an annuity due;
guess is usually ignored. If there is only one change in the sign
of cash flows, then guess can be ignored. It is highly likely that
in a given problem, either pv or fv is zero.

NPER

=nper(rate,pmt,pv,fv,type)
This function is used to find the number of periods over
which the present (or future) value of a series of
annuities is equal to the given pv (or fv).

Here, rate stands for the rate of interest per time period ; pmt
stands for the value of annuity; pv stands for the present value
of the annuities, fv stands for the future value of the annuities,
and type takes a value of 1 if it is an annuity due

PPMT

=ppmt(rate,per,nper,pv,fv,type)
This function is used to find the principal payment made
in a given period. Lets say you repay a loan by paying
60 EMIs of Rs.1000 each. Each EMI of Rs.1000 includes
an interest component and a principal component. PPMT
function is used to find the principal component of EMI.

Here, rate stands for the rate of interest per time period ; per
stands for the period for which we want to find the principal
component of the EMI; nper stands for the total number of
periods, pv stands for the present value of the annuities, fv
stands for the future value of the annuities, and type takes a
value of 1 if it is an annuity due

IPMT

=ipmt(rate,per,nper,pv,fv,type)
This function is used to find the interest payment made in
a given period. Lets say you repay a loan by paying 60
EMIs of Rs.1000 each. Each EMI of Rs.1000 includes an
interest component and a principal component. IPMT
function is used to find the interest component of EMI.

Here, rate stands for the rate of interest per time period ; per
stands for the period for which we want to find the principal
component of the EMI; nper stands for the total number of
periods, pv stands for the present value of the annuities, fv
stands for the future value of the annuities, and type takes a
value of 1 if it is an annuity due