PVLUMPSUM( ) function

Returns the present value required to generate a specific future lump sum calculated using a constant interest rate. Present value is the current, lump-sum value.

Syntax

PVLUMPSUM(rate, periods, amount)

Parameters

Name Type Description
rate numeric

The interest rate per period.

periods numeric The total number of periods.
amount numeric The value of the future lump sum at the end of the last period.

Note

You must use consistent time periods when specifying rate and periods to ensure that you are specifying interest rate per period.

For example:

  • for monthly payments on a two-year loan or investment with interest of 5% per annum, specify 0.05/12 for rate and 2 * 12 for periods
  • for annual payments on the same loan or investment, specify 0.05 for rate and 2 for periods

Output

Numeric. The result is calculated to two decimal places.

Examples

Basic examples

Interest compounded monthly

Returns 1000.00, the initial investment principal required to generate a future lump sum of $1,269.73, when invested for 2 years at 1% per month, compounded monthly:

PVLUMPSUM(0.01, 2*12, 1269.73)

Returns 787.57, the initial investment principal required to generate a future lump sum of $1,000, when invested for 2 years at 1% per month, compounded monthly:

PVLUMPSUM(0.01, 2*12, 1000)

Returns 21455.82, the initial investment principal required to generate a future lump sum of $27,243.20, when invested for 2 years at 1% per month, compounded monthly:

PVLUMPSUM(0.01, 2*12, 27243.20)

Interest compounded semi-annually

Returns 792.09, the initial investment principal required to generate a future lump sum of $1,000, when invested for 2 years at 12% per annum, compounded semi-annually:

PVLUMPSUM(0.12/2, 2*2, 1000)

Interest compounded annually

Returns 797.19, the initial investment principal required to generate a future lump sum of $1,000, when invested for 2 years at 12% per annum, compounded annually:

PVLUMPSUM(0.12, 2, 1000)

Remarks

What is present value?

The present value of an invested lump sum is the initial principal required to generate a specific future lump sum, within a particular time frame. The future value is the principal plus the accumulated compound interest.

Related functions

The FVLUMPSUM( ) function is the inverse of the PVLUMPSUM( ) function.

ACL Scripting Guide 14.1