BA II Plus: Present Value Step by Step

TL;DR

Present value discounts a future amount back to today. Enter N, I/Y, PMT, and FV, then compute PV. The displayed PV is usually negative because it is the price paid today.

Formula Reference

PV = FV / (1 + r)^n

BA II Plus Keystrokes

1. 2nd CLR TVM
2. Enter N
3. Enter I/Y as a percent
4. Enter 0 PMT
5. Enter FV
6. Press CPT PV

Worked Example

• Problem: Receive $10,000 in 4 years. Required return is 6 percent.
• Keystrokes: 2nd CLR TVM; 4 N; 6 I/Y; 0 PMT; 10000 FV; CPT PV.
• Result: PV is about -$7,920.94, so the present value is $7,920.94.

Common Mistakes

• Interpreting the negative PV sign as a negative value.
• Forgetting to set PMT to 0.
• Using annual N with a monthly rate or monthly N with an annual rate.

Related Guides

• Time Value of Money Calculations on the BA II Plus - CFA Level I TVM reference for present value, future value, annuities, perpetuities, and BA II Plus inputs.
• BA II Plus: Future Value Step by Step - Exact BA II Plus TVM keystrokes to calculate future value for CFA Level I lump-sum problems.
• CFA Level I Quantitative Methods Formula Sheet - Public formula sheet for CFA Level I quantitative methods calculations.