Question

hp 10bii plus financial calculator please

Suppose you will receive $300 at the beginning of each month for the next 15 years. If your opportunity cost is 8.5%, what is the present value of these payments?

Answer 1

Answer-

Payments made a the beginning of each month = PMT = $ 300
Number of periods = N = 15 x 12 = 180
Opportunity cost of capital = Interest rate = I/YR = 8.5 % / 12 = 0.708 % ~ 0.71 % / month [ As payments are paid monthly ]

Future value = FV = $ 0
Present value = PV = ?

Substituting the values in hp 10bii plus calculator and importantly setting the calculator in BEGIN mode

Present value = PV = $ 30644.71

Therefore the present value of these payments = $ 30644.71