I have the following formula in Excel:
=-PV(9.38%, 3(yrs), £300)
and this es to £754 which is correct.
I need to know how these numbers are used to produce 754, I need the mathematical formula from which I will then be able to replicate it in JavaScript.
I have the following formula in Excel:
=-PV(9.38%, 3(yrs), £300)
and this es to £754 which is correct.
I need to know how these numbers are used to produce 754, I need the mathematical formula from which I will then be able to replicate it in JavaScript.
Share Improve this question edited Oct 24, 2013 at 15:52 Lance Roberts 22.9k32 gold badges114 silver badges132 bronze badges asked Oct 24, 2013 at 13:56 AessandroAessandro 5,78321 gold badges73 silver badges146 bronze badges 02 Answers
Reset to default 6PV stands for Present Value - here's one implementation in JavaScript:
http://www.mohaniyer./old/pvcode.htm
Or search for others.
The math for pv(rate, per, pmt) is
SUM(n = 1 to per) of pmt/((1+rate)^n)
= 300/(1+.0938)^1 + 300/(1+.0938)^2 + 300/(1+.0938)^3
= 274.27 + 250.75 + 229.25 = 754.28
More info here
Its a basic present value formula from basic financial theory.
Why wouldn't you Google it at a place like :
http://office.microsoft./en-us/excel-help/pv-HP005209225.aspx
PV
Show AllShow All Returns the present value of an investment. The present value is the total amount that a series of future payments is worth now. For example, when you borrow money, the loan amount is the present value to the lender.
Syntax
PV(rate,nper,pmt,fv,type)
Rate is the interest rate per period. For example, if you obtain an automobile loan at a 10 percent annual interest rate and make monthly payments, your interest rate per month is 10%/12, or 0.83%. You would enter 10%/12, or 0.83%, or 0.0083, into the formula as the rate.
Nper is the total number of payment periods in an annuity. For example, if you get a four-year car loan and make monthly payments, your loan has 4*12 (or 48) periods. You would enter 48 into the formula for nper.
Pmt is the payment made each period and cannot change over the life of the annuity. Typically, pmt includes principal and interest but no other fees or taxes. For example, the monthly payments on a $10,000, four-year car loan at 12 percent are $263.33. You would enter -263.33 into the formula as the pmt. If pmt is omitted, you must include the fv argument.
Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (the future value of a loan, for example, is 0). For example, if you want to save $50,000 to pay for a special project in 18 years, then $50,000 is the future value. You could then make a conservative guess at an interest rate and determine how much you must save each month. If fv is omitted, you must include the pmt argument.