## What is the formula for calculating present value?

It’s important to understand exactly how the NPV formula works in Excel and the math behind it.

NPV = F / [ (1 + r)^n ] where, PV = Present Value, F = Future payment (cash flow), r = Discount rate, n = the number of periods in the future..

## How do you find the present value of a monthly payment?

Present Value of AnnuityThe present value of annuity formula determines the value of a series of future periodic payments at a given time. … When the periodic payments or dividends are all the same, this is considered a geometric series. … This equation can be simplified by multiplying it by (1+r)/(1+r), which is to multiply it by 1.More items…

## How do you calculate period in future value?

Solving for the number of periods can be achieved by dividing FV/P, the future value divided by the payment. This result can be found in the “middle section” of the table matched with the rate to find the number of periods, n.

## What is the present value of 1?

A present value of 1 table states the present value discount rates that are used for various combinations of interest rates and time periods. A discount rate selected from this table is then multiplied by a cash sum to be received at a future date, to arrive at its present value.