Jan

Entertainment
Cable TV
Video rentals
Movies
CDs
Totals

Feb
52.98
7.98
16
18.98

Discount amount
52.98
15.96
32
29.98

Discount

0.15

Cash Flows Types

1. Lump Sum: A single sum of money

PV

FVn
(1 i ) n

FVn PV (1 i) n

2. Annuity and perpertuity: Annuity is the periodic cash flows of the same amount for a

P V AN

C
C
i

i
(1 i ) N

FVA

C(1 i)
i

3. Uneven cash flows: A series of lump sum cash flows at different times

PV

CF1
CF2

...
1
2
(1 i )
(1 i )

1 Compute the following TVM. You need to do the computation in two ways: 1) writing th
Excel functions
A. PV of $300 in 5 years if the discount rate is 11%

PV

Formula
Excel Functon
B. FV of $300 today invested for 8 years at 9%
Formula
Excel Functon

FVn P

C. PV of 25 annual payments of $600 a year, if the discount rate is 9%

Formula
Excel Functon

P V AN

D. FV of 25 annual payments of $600 a year, beginning at the end of the year, if the int
Formula
Excel Functon

FVA

E. Find the interest rate on a 30-year mortgage with a initial loan amount of $275,000,

Let's use references for input values, i.e.,

INPUTS:
Loan amount
Period
Payment

OUTPUT:
275000 Rate is
360
1446.85

E. PV of Cash flows for the next 8 years as follows: 100, 200, 300, 400, 500, 600, 700, a
Formula
Excel Functon

F. Today is Janets 23rd birthday. Starting today, Janet plans to begin saving for her reti
each year on her birthday. Her first contribution will take place today. Her 42nd and fin
decided to help Janet with her savings, which is why she gave Janet $20,000 today as a
account has an expected annual return of 12 percent. How much will Janet expect to h
Excel function only. Use references, not hard-coding the numbers, in the Excel function

Inputs:
Annual Contributi
Annual Return
Num of periods

Output:
2000 Future Balance
0.12
42

V (1 i) n

ame amount for a given period.

C(1 i) N C

N
i
i

...

CF N
(1 i ) N

ways: 1) writing the formula on your own; 2) using

PV

FVn
(1 i ) n

FVn PV (1 i) n

P V AN

C
C
i

i
(1 i ) N

the year, if the interest rate is 7%.

FVA

C(1 i) N C

i
i

unt of $275,000, if the monthly payment is $1,446.85

, 500, 600, 700, and 800 at 8% discount rate.

saving for her retirement. Her plan is to contribute $2,000 to a brokerage account
Her 42nd and final contribution will take place on her 64th birthday. Her aunt has
20,000 today as a birthday present to help get her account started. Assume that the
Janet expect to have in her account on her 65th birthday? Just use the relevant
the Excel function as in Q. E above.