 Recall that the present value is the value an asset is worth in today's dollars. There are three ways to solve for present value. Using time value of money tables, using a financial calculator, or using Excel, which is the most common way. This video will show you how to calculate present value using Excel. The formula is equals PV, open parentheses, rate, which is the interest rate, n per, which is the number of periods, minus payment, which is a regular reoccurring amount, and it's possible that this could be zero because not every scenario has a regular reoccurring amount, and finally minus FV, which is the future value. When solving for present value in Excel, future value and payment are always negative amounts. So let's look at a couple different scenarios and I'll show you how to solve them in Excel. For example, a $10,000 notes receivable due in two years at 5%. We know the future value is $10,000. Let's see what it's worth in today's dollars. And a $10,000 notes receivable due in three years at 12% compounded monthly. When we compound something monthly, we divide the interest rate by 12 and multiply the number of periods by 12. Using the present value formula, I enter equal PV, open parentheses, 5%, comma, 2, comma, 0, because there's no regular payment, comma, and minus $10,000. And this returns a present value of $9,070.29. Then I enter equals PV, open parentheses, 12% divided by 12, comma, 3 times 12, comma, 0, comma, because again there's no regular payment, and minus $10,000. And this returns a present value of $6,989.25. So let's look at two more scenarios where we'll have a regular payment. Assume that you are a $1 million lottery winner. Yay! The lottery will pay you $20,000 per year for 50 years. That's how it totals $1 million. Let's figure out the present value, meaning how much real purchasing power you'll have, assuming a 6% discount rate and a 10% discount rate. I enter equals PV, open parentheses, 6%, comma, 50, comma, minus $20,000, comma, and 0 for future value, since there was no initial one-time amount. This results in a present value of $315,000 to $3721. And that is a lot less than $1 million. For this last one, I enter equals PV, open parentheses, 10%, comma, 50, comma, minus $20,000, comma, 0. Close parentheses. And this returns $198,296.29. And that's how you use Excel to solve for present value.