COMPUTING THE PRE

EQUAL CASH FLOWS UNEQUAL CASH FLOWS

Discount rate 10% Discount Rate 10%

Year Cash Flow Present value Year Cash Flow

1 100 90.91 1 100
2 100 82.64 2 200
3 100 75.13 3 300
4 100 68.30 4 400
5 100 62.09 5 500

Net Present Value Net Present Value

By SUM Function 379.07867694 By SUM Function 1065.259
By NPV Function 379.07867694 By NPV Function 1065.259
By PV Function 379.07867694
 COMPUTING THE PRESENT VALUE
L CASH FLOWS CASH FLOWS WITH INITIAL COST
10% Discount Rate 10%

Present Value Year Cash Flow Present Value

90.9091 0 -250 -250.0000
165.2893 1 100 90.9091
225.3944 2 100 82.6446
273.2054 3 100 75.1315
310.4607 4 100 68.3013
5 100 62.0921
Net Present Value
By SUM Function 129.08
By NPV Function 129.08
COMPUTING THE VALUE OF FINITE ANNUITY

Periodic Payment, C 1000

No. of Future periods paid, n 5
Discount Rate, r 12%

Present Value of Annuity

Using Formula 3604.78
Using PV Function 3604.78

Period Annuity Payment

1 1000
2 1000
3 1000
4 1000
5 1000

Present Value using NPV Function 3604.78

COMPUTING THE VALUE OF INFINITE ANNUITY

Periodic Payment, C 1000

Discount Rate, r 12%
Present Value of InfiniteAnnuity 8333.333
COMPUTING THE VALUE OF A GROWING FINITE ANNUITY
First Payment, C 1000
Growth Rate of Payments, g 6%
No. of Future Periods paid, n 5
Discount Rate, r 12%

Present Value of Annuity

Using Formula 4010.91

Period Annuity Payment

1 1000
2 1060.00
3 1123.60
4 1191.02
5 1262.48

Present Value of Annuity Using NPV Function 4010.91

G FINITE ANNUITY COMPUTING THE VALUE OF A GROWING INFINITE A
Periodic payment, C 1,000
Growth rate of payments, g 6%
Discount rate, r 12%
Present value of annuity 16,666.67

PV=>C*(1-((1+g)/(1+r))^n)/(r-g)

y Payment

C*(1+g)^(n-1)
C*(1+g)^(n-1)
C*(1+g)^(n-1)
C*(1+g)^(n-1)
ROWING INFINITE ANNUITY

C/(r-g)
 INTERNAL RATE POF RETURN

Year Cashflow
0 -800
1 200
2 250
3 300
4 350
5 400
Internal Rate of Return 22%
RATE POF RETURN
IRR By Trial & Error
Discount Rate 12%
Year Cashflow
0 -800
1 200
2 250
3 300
4 350
5 400
Net Present Value NPV 240.81

Goal Seek Function

Discount Rate 22%
Year Cashflow
0 -800
1 200
2 250
3 300
4 350
5 400
Net Present Value NPV 0.00