Financial Functions
Advanced

PV of a single future amount

No payments, just one sum later — what is it worth today?

Task:

A customer offers to pay 50,000 in 4 years' time instead of now. At a discount rate of 6% a year, what is that promise worth today? Put the present value, as a positive figure, in B5.

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Hints

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Solve it on your own to keep the bonus. Each hint gets one step closer to the formula.

Variations of PV

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The same formula in the other shapes it takes at work.

  1. PV Function

    Calculate the present value of an investment using the PV function.

    Core
    Advanced
  2. PV of a single future amount

    No payments, just one sum later — what is it worth today?

    Advanced
  3. PV: how much can I borrow?

    Start from the monthly payment you can afford and work back to the loan.

    Advanced

The data in this exercise

This is the grid you start with. Cell references in the task — B6, C2 — point at the row numbers and column letters below.

5 rows × 2 columns1 cell you fill in
AB
1Annual rate0.06
2Years4
3Amount later50000
4
5Worth today
What this exercise teachesMay contain the answer

PV handles a lump sum by setting the payment to zero and putting the amount in fv. Money later is worth less than money now — here about 39,600 — which is the number to compare against any discount offered for paying today.