net present value of investment in Excel

Q59. I am considering an investment of $500 per month for 3 years @ 6% annual interest rate. What is the Present Value of investment?

To do it in Excel, here is the answer:

a) Enter the formula =PV(6%/12,36,500) in an empty cell.

Note: First argument is interest rate - 6% is annual interest rate. Hence it is divided by 12 to get monthly rate.

Note: Second argument is number of periods - (3 years = 36 months).

Note: Third argument is payment per period - ($500).

Above formula returns the Present Value of the investment being considered as shown below.

excel net present value of investment


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