Question

please show steps on how to get answer on financial calculator

If you deposit $500 from year 1 to year 5, $300 from year 6 to year 20, and no deposit in year 20 and 21, and $700 in year 22. If the discount rate is 5%, what is the present value?

Answer 1

You need to use a Financial calculator to solve this problem. You can download it.

Press CF Button, CFo = 0

Press Down arrow key, CO1 = 500 (You deposited 500 for 5 years)

Down arrow key, FO1 = 5 (As 500 deposited for 5 years)

similarly, CO2= 300, FO2 = 14 (As 300 deposited for next 14 years)

CO3 = 0, FO3 = 2(No deposit in 20 and 21)

CO4 = 700 (700 deposited on 22nd year)

Press NPV Button, I= 5 (The discount rate is 5%)

Press Down arrow key, press CPT, NPV = 4730.78  

So the present value of the investment is $4730.78

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