Скачать или смотреть How To Calculate The Present Value Of Money In Excel Explained - Excel Time Value Of Money

In this video we discuss how to calculate, by hand, the present value of money in excel. We go through, step by step, a detailed example of how to input the formula in excel

Transcript/notes
Here is the formula for calculating the present value of money.

In this formula, future value represents the value of an amount in the future, r represents the yearly interest rate, n represents the number of compounding periods per year and t represents the time in years.

As an example, let’s say that someone wants to buy a used motorcycle in 2 years, that will cost $1800. Their bank has an account that pays 9% interest compounded quarterly, so 4 times per year. How much do they need to put in the account today to have $1800 in 2 years?

As you see, I have listed the values in cells, so we can reference them when we enter the present value formula into excel.

Now, were going to calculate the present value and put the answer in cell D2, so we left click on cell D2, so it is highlighted. Next, we type in an equals sign. Referring to the formula, we first need left click on the future value amount, cell B2. Next, we type in a division sign, which is a forward slash in excel.

From here we type in an open parenthesis, then we type in a 1, and then we type in a plus or addition sign. Next, we left click on the rate amount, cell B3, then we type in a division sign. Now we left click on the number of compounding periods per year, cell B4, then we type in a closed parenthesis, to close off the 1 plus r over n portion of the formula.

From here we type in a power symbol, which is called a carrot symbol in excel, which is shift 6 on the keyboard. Next, we type in an open parenthesis and then we left click on the number of compounding periods per year, cell B4. From here, we type in a multiplication sign and then we left click on the number of years, cell B5. Next, we type in a closed parenthesis to close off the n times t portion of the formula, and then we hit the enter key, and we have our answer of $1506.49.

Chapters/Timestamps
0:00 Formula for present value and example set up
0:38 Begin present value formula in excel
1:38 Final answer