 # Formula For Pv Factor

• Which formula should I use to look for the present value factor if I have the interest rate and the # of periods. Please see attached file.

## Files

• Re: Formula For Pv Factor

Yes, the payments are on the attached.

Tks

• Re: Formula For Pv Factor

So for the first row is this correct?

Interest Rate = 5%
No of periods will be = 12 as its 30/06/02007 - 30/06/2008
Payment per month = 846,540.92

Is that correct?

• Re: Formula For Pv Factor

Quote from ByTheCringe2

What is the mathematical formula to get this factor?

It appears to be E column / C column. Which doesnt really make sense? :confused:

Anyway that means you need to calculate the present value which is why I asked the questions above. i think I may be off track tho.

More details would be nice. • Re: Formula For Pv Factor

enter the following formula in J7 and copy down:

J7: =ROUND(1/(1+\$J\$4)^\$G7,4)

filippo

• Re: Formula For Pv Factor

The formula worked.

Thanks

• Re: Formula For Pv Factor

Quote from filo65

enter the following formula in J7 and copy down:

J7: =ROUND(1/(1+\$J\$4)^\$G7,4)

filippo

Well done, howd you come up with that?

• Re: Formula For Pv Factor

Reafidy,

-concerning the round is because the data mgiv provided had only 4 digits
-concerning the formula, it depends: up to one/one and a half years, it's normally used the simple actualization, that is = C / (1 + r% * dt ) ( they are normaly deposit rates calculated normally on a ACT/360 day basis ); above the one year mark ( market convention ) one normally switch to a compound actualization = C * (1 + r% )^t, because you assume the capital to be reinvested at same rate for the time t ( day convention: ACT/ACT, 30/360, etc. ) which actually is not the case, but it's easy and fast to calculate ( basically it assumes a flat yield curve ). Normally in financial markets on the base of deposit, futures and swap rates, one calculate a zero curve ( with the bootstrapping method ) and from there a REAL the discount curve, for each maturity.
having that you can calculate the pv any of your investments.

filippo

• Re: Formula For Pv Factor

Quote from filo65

Reafidy,

-concerning the round is because the data mgiv provided had only 4 digits
-concerning the formula, it depends: up to one/one and a half years, it's normally used the simple actualization, that is = C / (1 + r% * dt ) ( they are normaly deposit rates calculated normally on a ACT/360 day basis ); above the one year mark ( market convention ) one normally switch to a compound actualization = C * (1 + r% )^t, because you assume the capital to be reinvested at same rate for the time t ( day convention: ACT/ACT, 30/360, etc. ) which actually is not the case, but it's easy and fast to calculate ( basically it assumes a flat yield curve ). Normally in financial markets on the base of deposit, futures and swap rates, one calculate a zero curve ( with the bootstrapping method ) and from there a REAL the discount curve, for each maturity.
having that you can calculate the pv any of your investments.

filippo

Thanks Filo, crystal clear.

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