present value of a future amount

[xrbbaker]

How do I find out the current value of a future amount? Let's assume 10
years from now somebody hands me $10,000. Assuming 4% inflation, how do I
determine how much that $10k is worth today? When I look at PV and NPV they
seem to want periodic payments which this doesn't have.

thanks

 

[Michael]

=PV(0.04/12,120,0,10000,1)

 

[xrbbaker]

Cool. The amount seems intuitively right. Why does it return a negative
number?

Thanks much!

Russ

 

[Fred Smith]

It's the convention that most financial functions (including Excel) use. By
convention, a negative number is money out of your pocket, and a positive number
is money going back into your pocket. However, you can use them whichever way
you want as long as you remember they have opposite signs. If you have payments,
make sure the sign is correct.

 

[xrbbaker]

Makes sense. Thanks!

It's the convention that most financial functions (including Excel) use. By
convention, a negative number is money out of your pocket, and a positive number
is money going back into your pocket. However, you can use them whichever way
you want as long as you remember they have opposite signs. If you have payments,
make sure the sign is correct.