On Feb 13, 11:44*pm, "Murthy" wrote:
If a certain amount (P) is receivable after certain period,
I would like to know the present value (V) of that future
receipt (P), discounted at a certain percentage (R). *The
discounting has to be done on a monthly basis

A concise example might help you get started. Suppose the amount to
be discounted (usually called FV for "future value") is 10,000, and
the annual discount rate is 6% over 5 years. Then present value
(usually called PV) can be computed in one of a number of ways.

=pv(6%/12, 5/12, 0, -10000)

That results in a positive value for PV because I used a negative
value for FV. Many people use the opposite signs: negative for PV,
positive for FV. The choice is arbitrary, and it can decide on your
point of view. But the important point is: be consistent about how
you sign inflows and outflows.

One last point: If 6% is the annual discount rate, there is no common
agreement about how to determine the "sub-annual" rate (monthly, in
this case). Some people simply divide by 12, as above. Other people
compute the compounded monthly rate, for example (two equivalent
ways):

=pv(rate(12,0,-1,1+6%), 5/12, 0, -10000)

or

=pv((1+6%)^(1/12), 5/12, 0, -10000)

The rationale for computing the compound monthly rate is that you want
the annual rate to be 6%. So if you have 100 and you compute the FV
at some monthly rate over 12 months, the result should be 106. The
formula would be:

=fv(r, 12, 0, -100)

If "r" is rate(12,0,-1,1+6%), we get 106, as expected. If "r" is 6%/
12, we get 106.17 (rounded).