Question

16. Calculate the value today that is equivalent to $150 at the end of year 1, $450 at the end of year 2, and $300 at the end of year 3, given a discount rate of 10%. how do i do this using excel and what functions do i use to do it

Answer 1

Rate ( r )	Period (n)	Future values (FV)	Present values (PV)	Formula for excel
10%	1	$150	$136.36	=PV(10%,1,0,-150)
10%	2	$450	$371.90	=PV(10%,2,0,-450)
10%	3	$300	$225.39	=PV(10%,3,0,-300)

We can calculate present values as, PV = FV/(1+r)^n

Or

Formula in excel: =PV(rate, nper , pmt , [FV] , [type])

Present value = PV, rate = r, nper = period / years, pmt = annual payment = 0, FV = -future value, Type is optional , ignore it.