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Unformatted text preview: present value: PV100 $ interest rate: i 0.05 periods: n 3 yr FV = $115.76 no payment is made therefore enter PMT = 0 Author: =FV(0.05,3,0,100) FV = 115.76 $ I = 0.05 N = 3 yr PMT = 0 for calculating PV of a lumpsum PV = ($100.00) the result in red color means that it's a negative number, which indicates you have to pay money in present to get money (+ sign) in the future Author: =PV(0.05,3,0,115.76) payment = PMT = 100 $ I = 0.05 N = 3 yr FVA = $315.25 PMT is negative because you have to deposit (pay out) $100 to get/ receive FVA in the future For ordinary FVA we omit or enter 0 in the Type button, for FVA due, we enter 1 in the Type Author: =FV(0.05,3,100,0) PMT =100 $ I = 0.05 N = 3 yr PVA = $272.32 here, FV = 0 Author: =PV(0.05,3,100) you can save only $1,200 annually, but you still want to have the $10,000 in 5 yrs. What rate of return would enable you to achieve your goal? PMT = 1200 $ FV = 10000 $ N = 5 yr → PV = 0 I = 25.78% remember to enter the input numbers with negative and positive signs appropriately, otherwise, the computer cannot calculate for you...
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 Spring '11
 tom
 Net Present Value, Internal rate of return

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