Question

1.Payments are not equal, they change from period to period. Find the present value of the payment in each period and sum them to find the present value of all the cash flows. What is the present value of an investment that pays $200 in year 1, $300 in year 2, and $400 in year 3? Assume a rate of return of 12%. ($702.44)

2.You are buying a new car and will have a 12,500 loan with equal payments for 4 years    (48 months). The interest payment will be 6.5%. What will your monthly       payment be?    ($296.44)You are buying a new car and will have a 12,500 loan with equal payments for 4 years    (48 months). The interest payment will be 6.5%. What will your monthly       payment be?    ($296.44)

can you please show me how to do on excel. thanks!

Answer 1

1)

D Present value 1 A B 164 Year Cash flow 1650 $ - 166 1 $ 200 167 2 $ 300 168 3 $ 400 169 C PVIF@12% 1.000 0.893 $ 0.797 $ 0.712 $ 178.57 239.16 284.71 170 Present value $ 702.44

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