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.
