Excel FV & PV Functions — Future Value, Present Value & the Rule of Five

TL;DR — FV returns what a stream of payments (and/or a starting balance) will be worth in the future; PV returns what a future sum or a stream of payments is worth today. Both are the same equation as PMT, solved for a different unknown. There are five variables — rate, nper, pmt, pv, fv — and Excel gives you one function per unknown, so knowing any four gets you the fifth. The same sign convention rules everything: money you put in is negative, money you get back is positive. Works in every version of Excel.

=FV(6%/12, 10*12, -500)        ' save $500/month for 10 years at 6% -> 81939.67
=PV(5%/12, 20*12, -1000)       ' what is $1,000/month for 20 years worth today? -> 151525.31
=FV(6%/12, 10*12, -500, -1000) ' same savings plan, plus $1,000 already in the account
=RATE(10*12, -500, 0, 81939.67)*12  ' back out the annual rate from the numbers -> 6%

Every finance textbook opens with "the time value of money," then makes you memorize a page of formulas with exponents. Excel collapses that page into five functions that are really one function wearing five hats. Once you see that, FV and PV stop being two things to learn and become two questions to ask about the same relationship.

What you'll learn

The Rule of Five: five variables, one function per unknown
FV — the future value of a savings plan (or any lump sum)
PV — what a future amount, or a stream of payments, is worth today
Why the sign convention decides whether your answer makes sense
The type argument: end-of-period vs beginning-of-period (annuity-due)
RATE and NPER — solving for the interest rate and the number of periods

The Rule of Five

Underneath FV, PV, PMT, RATE, and NPER sits a single equation that ties five quantities together:

rate — the interest rate per period
nper — the number of periods
pmt — the payment made each period
pv — the value today (present value)
fv — the value at the end (future value)

Give any four of them and the fifth is determined. Excel just names each function after the variable it solves for:

Unknown	Function	Question it answers
payment	`PMT`	What's the level payment?
future value	`FV`	What will it grow to?
present value	`PV`	What is it worth today?
rate	`RATE`	What return does this imply?
periods	`NPER`	How long will it take?

This is why the arguments look so similar across all five — they're slots in the same equation. Master the conventions once and every function here reads the same way.

FV — the future value of a savings plan

=FV(rate, nper, pmt, [pv], [type]) answers "if I put money away every period, what will I have at the end?"

=FV(6%/12, 10*12, -500)        ' $500 deposited monthly for 10 years at 6% -> 81939.67
=FV(6%/12, 10*12, -500, -1000) ' the same, but starting from $1,000 already saved -> 83759.07
=FV(6%/12, 10*12, 0, -10000)   ' no deposits: just $10,000 growing for 10 years -> 18193.97

The pmt is -500 because you're paying money out into the account; FV comes back positive because that's money you'll eventually take back out. The optional pv is any lump sum already in the account at the start (also negative — it's money you've put in). Leave pmt at 0 and FV becomes plain compound growth of a single sum.

PV — what a future stream is worth today

=PV(rate, nper, pmt, [fv], [type]) runs the clock the other way: given a payment stream or a future lump sum, what's it worth now? This is the engine behind bond pricing, lease valuation, and "should I take the lump sum or the annuity?" decisions.

=PV(5%/12, 20*12, -1000)       ' a $1,000/month pension for 20 years, at 5% -> 151525.31
=PV(5%, 10, 0, -10000)         ' a single $10,000 due in 10 years, at 5% -> 6139.13

The reading: a promise of $1,000 a month for twenty years is worth about $151,525 today at a 5% discount rate — noticeably less than the $240,000 of raw payments, because money later is worth less than money now. That gap is the time value of money, and PV is how you price it.

The sign convention decides everything

FV and PV inherit the exact rule from PMT: cash out is negative, cash in is positive. Get it wrong and Excel won't warn you — it'll just hand back a number with a sign that quietly makes no sense.

=FV(6%/12, 10*12, -500)        ' pmt negative (money in) -> +81939.67  (correct)
=FV(6%/12, 10*12, 500)         ' pmt positive -> -81939.67  (Excel thinks you're withdrawing)

If an FV or PV comes back negative when you expected positive (or vice versa), don't reach for ABS — check your signs. A savings deposit and the balance it produces must have opposite signs, because one is money going in and the other is money you could take out. When both are the same sign in the same relationship, the model is telling you something is inconsistent.

The type argument: when do payments happen?

The optional type argument decides whether each payment lands at the end of its period (the default, an ordinary annuity) or at the beginning (annuity-due):

=FV(6%/12, 10*12, -500, 0, 0)  ' deposits at period END (default) -> 81939.67
=FV(6%/12, 10*12, -500, 0, 1)  ' deposits at period START -> 82349.37

Beginning-of-period payments earn one extra period of interest each, so FV is a little larger and PV is a little larger too. It matters for anything paid in advance — rent, leases, insurance premiums — where type should be 1. For ordinary loans and most savings, the default 0 is correct.

RATE and NPER — the other two unknowns

The same equation solves for the interest rate or the number of periods when those are what you're missing.

RATE(nper, pmt, pv, [fv], [type], [guess]) finds the rate per period. It's iterative — Excel guesses and refines — so it can return #NUM! if it can't converge; supply a guess (like 10%) to help. Remember to annualize:

=RATE(5*12, -200, 10000)*12    ' what annual rate turns a $10,000 loan into $200/month for 5 years? -> ~7.4%
=RATE(10, 0, -1000, 2000)      ' what rate doubles $1,000 in 10 years? -> ~7.18% per period

NPER(rate, pmt, pv, [fv], [type]) finds how many periods it takes:

=NPER(6%/12, -500, 0, 100000)  ' how many months of $500 to reach $100,000 at 6%? -> ~139 months
=NPER(18%/12, -100, 2000)      ' how long to pay off a $2,000 card at 18% paying $100/month? -> ~24 months

Both obey the sign convention exactly like FV, PV, and PMT. If RATE returns #NUM!, the usual cause is signs that don't allow a solution — you need at least one inflow and one outflow — or a guess that's too far off.

How ExcelMaster helps

The hard part of FV/PV is rarely the function name; it's keeping the five variables and their signs straight, and remembering which one you're solving for. Tell ExcelMaster "how much do I need to save each month to have $100,000 in 15 years at 6%," and it picks the right function (PMT here, because the payment is the unknown), sets the signs so the answer is positive, and matches the rate to the period. Hand it a RATE returning #NUM! and it checks that your cash flows actually change sign and adds a sensible guess.

Frequently asked questions

What is the difference between FV and PV in Excel?

FV (future value) tells you what money will be worth later — the ending balance of a savings plan or a growing lump sum. PV (present value) tells you what a future amount or payment stream is worth today. They're two directions of the same time-value-of-money equation: FV compounds forward, PV discounts backward.

Why does FV return a negative number?

Because of the sign convention. If you enter the payment as a positive number, Excel reads it as money being withdrawn, so the future value comes back negative. Enter deposits as negative (-500) and FV returns a positive balance. Money in and money out must have opposite signs.

How do I calculate compound interest with FV?

Use FV with no payments: =FV(rate, nper, 0, -principal). For example, =FV(6%/12, 10*12, 0, -10000) grows $10,000 at 6% compounded monthly for 10 years, returning about 18193.97. Match the rate and period to the compounding frequency — divide an annual rate by 12 for monthly compounding.

What does the type argument do in FV and PV?

type sets when each payment occurs: 0 (the default) for the end of the period, 1 for the beginning. Beginning-of-period payments (annuity-due, used for rent and leases paid in advance) earn an extra period of interest, so both FV and PV come out slightly higher.

When should I use RATE or NPER instead?

Use RATE when the interest rate is the unknown ("what return does this deal imply?") and NPER when the number of periods is unknown ("how long until this is paid off / until I reach my goal?"). They solve the same equation as FV, PV, and PMT, just for a different variable — the Rule of Five.

Tested in

Tested in: Excel 365 (Windows 11) — last verified 2026-07-23.