Use the PV command to find the present value of each of the following future cas
ID: 2715977 • Letter: U
Question
Use the PV command to find the present value of each of the following future cash flows at a discount rate of 10% per year, compounded monthly: (Warning: Be sure to use the rate that’s appropriate for the calculations in each part of this problem. Labels for data and calculated values must all be complete.) a. Monthly payments of $1,500 at the beginning of each month for the next six years b. Monthly payments of $1,500 at the end of each month for the next six years. c. Year-end receipts of $5,000 for each of the next five years.
Explanation / Answer
A
B
C
1
solution
2
monthly payment
1500
3
interest rate p.a
10%
4
number of years
6
5
value when payments are over
0
6
payment at begining
0
7
payment at begining
1
8
9
a
.=PV(C2/12,C3*12,C1,C4,C5)
- 80,968.00
10
b
.=PV(C2/12,C3*12,C1,C4,C6)
- 81,642.73
11
12
yearly receipt
5000
13
interest rate (monthly compounded)
10%
14
interest rate (annul compounded)
10.47%
15
(1+(0.1/12))^12-1
16
17
c
.=PV(C13,5,-5000,0,0)
18,727.91
A
B
C
1
solution
2
monthly payment
1500
3
interest rate p.a
10%
4
number of years
6
5
value when payments are over
0
6
payment at begining
0
7
payment at begining
1
8
9
a
.=PV(C2/12,C3*12,C1,C4,C5)
- 80,968.00
10
b
.=PV(C2/12,C3*12,C1,C4,C6)
- 81,642.73
11
12
yearly receipt
5000
13
interest rate (monthly compounded)
10%
14
interest rate (annul compounded)
10.47%
15
(1+(0.1/12))^12-1
16
17
c
.=PV(C13,5,-5000,0,0)
18,727.91
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