PV
function(rate;nper;payment;vf;type)
Returns the actual value of an investment. The actual
value is the sum of a series of payments to be made in the future.
PV syntax(rate;nper;payment;type)
RATE = is the interest rate per period
Nper
= is the total of periods in an annuity
Payment = is the
payment effected in each period and does not change during the life of
the annuity.
Vf = is the future
value or balance in cash that you wish to obtain after effecting the final
page. If the vf argument is omitted, the value will be assumed to be zero.
(a loan for example)
Type = is the number
0 (expiration of payments at the end of the period), or 1 (expiration
at the beginning of the period)
Eg: We plan to design a
pension plan that will pay us 500€ monthly during 15 years. The plan
costs us 35.000€ and the money earns an annual interest of 10%. We
use the VA function to calculate whether it is worth it to make a retirement
plan.
We therefore write the PV(10%/12;15*12;500),
which should return 46.528,72 € which
appears in negative because it is the money that will be payed. And we
can now see that it would be worthwhile as the money invested was 35.000
€ and we have a return of 46.528,72 €.
FV function(rate;nper;payment;type)
Returns the future value of an investment based on
periodic payments and constants, with a fixed interest rate.
Observations
Maintains uniformity in the use of the units with
which the rate and nper arguments are specified. If monthly payments are
made to a 5 year loan with an annual interest of 10%, it will use 10/12%
for the rate argument and 5*12 for the nper argument. If annual payments
are made to the same loan, it will use 10% for the rate argument and 5
for the nper argument.
FV syntax(rate:nper;va;type)
Rate =
the interest rate for the period
Nper = is the total
amount of payments of an annuity
Payment = is the
payment made at every period, and can not be changed during the validity
of the annuity.
Va = is the actual
value of the total quantity of a series of future payments. If the argument
is omitted, it is considerred 0 (zero)
Type = indicates
when the pyments are overcome(0 final of the period, 1 beginning of the
period). If the argument is omitted, it is considerred 0 (zero)
Eg: We are planning to save
money until a limited date and with a starting date. With an initial deposit
of 2000€ we know that the interest returned by our savings account
is 7%, every month we will deposit 100€ and we will wait for one
year to see what result we will be offered.
We use the FV(7%/12;12;100;2000)
function and we obtain a result of 3.383,84 € which is not bad as
we have already profited 183,84 € in one year by doing nothing, just
saving.
NPV(rate;value1;value2;...)
Returns the actual net value of the investment from
a discount rate and a series of future payments.
NPV syntax (rate;value1;
value 2;.......)
Rate
= is the discount rate during the period
Value 1; value 2....are
the arguments 1 to 29 that represent the payments and earnings.
Value 1; value 2...should have the same duration and should occur at the
end of each period.
NPV uses the value 1; value 2... to interprete the
order of the box flows. Payment and earnings values need to be introduced
in the correct order.
Arguments consist of numbers, empty cells, logical
values, are calculated, the arguments that consist of error or text values
that can not be translated to numbers are transferred upward.
Observations
The NPV investment starts one period before the box
flow date of value 1, and ends with the final box flow of the list. The
NPV calculation is based on future flow boxes. If the first cash flow
occurs at the beginning of the first period, the fisrt value should be
added to the NPV result, which is not included in the value arguments.
Eg: Let us consider an investment
of 55.000 € and we will wait to receive the ingresses in the next
5 years, the annual discount rate is 7%.
We have the following earnings table:

A 
B 
C 
D 
E 
F 
1 

Earnings 




2 
Initial Inv 
1st year 
2nd year 
3rd year 
4th year`5th year 
5º Año 
3 
55000 
5000 
8000 
12000 
14500 
25000 
We write the NPV(7%;B3:F3)+A3
function and we obtain 4.657 €, which
tells us that we have still not started to receive profits even though
the profits have surpassed the initial investent.
