Excel Companion Chapter 3 Section 6
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PERIODIC PAYMENTS --- Present Value TVM2.xls

Open the sheet for PVORDANN in TVM2.xls. In this example, a stream of payments at the end of each period for 12 periods is ‘discounted’ or ‘brought back’ in time to the present. The assumed interest rate per period is 1.5%. These stream of payments is worth $87,260.04 in present day dollars.

TVM2.xls-PVORDANN

QUESTIONS:

1. What is the present value of the $8,000 payment that will be made at the end of priod 5?

2. What is the present value of the $8,000 payment that will be made at the end of period 12?

3. What is the present value of the first five payments?

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Copyright © Joseph F. Aieta, Babson College 1997