COMPUTING THE PRESENT VALUE

Discount rate 10%

year cash flow present value

1 100 90.91
2 100 82.64
3 100 75.13
4 100 68.30
5 100 62.09
sum formula 379.08
npv $379.08
pv $379.08

COMPUTING THE PRESENT VALUE

Discount rate 10%
year cash flow present value
0 -250 -250
1 100 90.9090909091
2 100 82.6446280992
3 100 75.1314800902
4 100 68.3013455365
5 100 62.0921323059
sum formula 129.0786769408
npv formula $ 129.08

compute the value of finite annuity

Periodic payment 1000
number of future periods paid 5
discount rate 12%
present value of annuity:
using formula 3,604.78
using excel PV function $3,604.78
period Annuity payment
1 1,000.00
2 1,000.00
3 1,000.00
4 1,000.00
5 1,000.00
npv formula $3,604.78

compute the value of finite annuity

Periodic payment 1000
discount rate 12%
pv of annuity 8,333.33
 compute the value of a growing finite annuity
first payment, C 1000
growth rate of payments, g 6%
number of future periods paid, n 5
discount rate, r 12%
present value of annuity:
using formula 4,010.91

period annuity payment

1 1,000.00
2 1,060.00
3 1,123.60
4 1,191.02
5 1,262.48
present value using Excel's NPV function $4,010.91

compute the value of a growing finite annuity

periodic payment, C 1,000.00
growth rate of payments, g 6%
discount rate, r 12%
present value of annuity 16,666.67

INTERNAL RATE OF RETURN

YEAR CASHFLOW
0 -800
1 200
2 250
3 300
4 350
5 400
IRR 22%
VALUE

VALUE

te annuity

te annuity
g finite annuity

g finite annuity