Question

Emily wishes to purchase a new car. The car will cost $35,000 and her credit union will finance the car at 6% for 5 years. Calculate Emily's monthly payment on the loan.

*USE THE PV FUNCTION IN EXCEL

COST			35000
NUMBER OF PERIODS
AT

Sally has just won the million-dollar Big Slam jackpot at a gambling casino. The casino will pay her $50,000 per year at the end of each of the next 20 years as the payoff. If Sally can earn a 10% rate of return on invested money, what is the present value of her winnings? If the first payment was made today and the remaining 19 payments occurred at the beginning of each of the next 19 years, what is the present value of her winnings?  

*USE THE PV FUNCTION IN EXCEL

ANNUAL PAYMENTS			50000
NUMBER OF PERIODS			20
AT			10%
IF PAYMENTS AT
BEGINNING OF EACH YEAR?

Answer 1

a)	Interest Rate (rate)	Term in years (nper)	Present Value	Future Value (fv)	Payment (pmt)	Formula
	6%/12 = 0.5%	5Yrs*12 = 60	35000.00	0	676.65	=PMT(0.5%,60,35000,0,0)
	=PMT(rate,nper,pv,[fv],[type])
	Monthly payment is $677
b)	Interest Rate (rate)	Term in years (nper)	Payment (pmt)	Future Value (fv)	Present Value	Formula
	10%	20	50000		₹ 4,68,246.00	=-PV(10%,20,50000,,1)
	The PV function in Excel is as follows:
	=PV(rate,nper,pmt,[fv],[type])
	Note: When the PV function is used with the fv argument instead of the pmt argument,the pmt argument in the function is indicated with a comma