ANNUITY

Present Value

Calculate the PV of the individual cash flow using Eqn 8.1a, where FV is the cash flow in Row 22, k = 6%, and n = the time is Row 21 The value in the yellow cell will calculate on its own.

Calculate the PV of the payment using the Excel PV function, where FV =$80, k = 6%, and n = 5.

Inputs

Payments

$80

Discount rate per period

6%

Number of periods

5

Annuity Present Value using a Time Line

Period

0

1

2

3

4

5

Cash Flows

$80.00

$80.00

$80.00

$80.00

$80.00

Present Value of Each Cash Flow

Present Value

$0.00

2%

4%

6%

8%

10%

12%

Annuity Present Value using the PV Function

Present Value