Computing the present value

Discount rate 5%

Year Cashflow Present value

0 -1600 -1600
1 300 285.7142857143
2 200 181.4058956916
3 100 86.3837598531
4 400 329.0809899168
5 200 156.7052332937
6 -100 -74.6215396637
7 300 213.204399039
8 100 67.6839362029
9 200 128.9217832436
10 400 245.5653014163

Net present value:

Smming cell C5:C15 20.0440447076
Using Excel's NPV function: $ 19.09 20.04
IRR 5%

Using rate function to compute IRR

1 Initial investment 2,000
2 Periodic cashflow 200
3 Number of payment 60
4 IRR 9.97%

Simple future value

Interest 12%

Account balance Interest earned during year

beginning of year Total in
account, end
Year year
1 2000 240 2240
2 2240 268.8 2508.8
3 2508.8 301.056 2809.856
 4 2809.856 337.18272 3147.03872
5 3147.039 377.64468 3524.68368
6 3524.684 422.96208 3947.64608
7 3947.646 473.71752 4421.36352
8 4421.364 530.56368 4951.92768
9 4951.928 594.23136 5546.15936
10 5546.159 665.53908 6211.69808

Flat payment schedule:

Loan Principal
Interest Rate
Loan Term
Annual Payment

Computing the present value

Discount rate

Year Cashflow
0 -1600
1 300
2 200
3 100
4 400
5 200
6 -100
7 300
8 100
9 200
10 400

Net present value:

Smming cell C5:C15
 Using Excel's NPV function: $ 19.09
IRR 5%

MIRR:
Discount rate 5%

NPV 20.67

Year Cashflow
0 -150
1 110
2 110
3 110
4 110
5 -280

Continuous Discounting:
Interest 10%

Year Cashflow Continuously discounted PV

1 200 180.9674836072
2 300 245.6192259234
3 400 296.3272882727
4 500 335.1600230178
5 600 363.9183958276

Present value 1421.9924166487

A Retirement Problem:
Interest 10%
Annual deposit 20000
Annual retirement
withdrawal
20000

Account Deposit at beginning of year Interest

balance,beginning of earned
year during year
Year
1 0 20000 2000
2 22000 20000 4200.00
3 46200 20000 6620.00
4 72820 20000 9282
5 102102 -20000 8210.2
6 90312.2 -20000 7031.22
7 77343.42 -20000 5734.342
8 63077.762 -20000 4307.7762
 9 47385.5382 -20000 2738.55382
10 30124.09202 -20000 1012.409202
DR 11%
0 -1000
1 200
2 250
3 300
4 350
5 400
13% IRR
$ 63.41
DR

Interest
Annual deposit

Number of
deposit

Year

1
2
3
 4
5
6

20,000
8%
6
4326.31

Principal at the Payment at Interest

beginning of year the end of
year
Year
1 20,000 4,326.31 1600
2 17,273.69 4,326.31 1381.8952
3 14,329.28 4,326.31 1146.3424
4 11,149.31 4,326.31 891.9448
5 7,714.94 4,326.31 617.1952
6 4,005.83 4,326.31 320.4664
7 0 0.00 0

5%

Present value
-1600
285.7142857143
181.4058956916
86.3837598531
329.0809899168
156.7052332937
-74.6215396637
213.204399039
67.6839362029
128.9217832436
245.5653014163

20.0440447076
 20.04

Data Table

Discount NPV
rate
20.67
0% 10.00
1% 12.81
3% 17.35
5% 20.67
7% 22.96
9% 24.39

Total in account,end
year

22000
46200.00
72820.00
102102
90312.2
77343.42
63077.762
47385.5382
 30124.09202
11136.501222
 Cashflow
-1000
200
250
300
350
400
4%
Year Beginning Balance Cashflow Income
1 1000 200 130.00
2 930 250 93
3 773 300 30.92
4 503.92 350 20.1568
5 174.0768 400 17.40768

Future value with annual deposit

10%

2000

6
Account balance beginning of year Deposit at beginibg of year Interest earned during year
Total in
account,
end year
0 2000 200 2200
2200 2000 420 4620
4620 2000 562 7182
 7182 2000 818.2 10000.2
10000.2 2000 1100.2 13100.4
13100.4 2000 1410.04 16510.44

Return of principal

2,726.31
2,944.41
3,179.97
3,434.37
3,709.11
4,005.84
0.00
 4%

Principal Ending Balance

70.00 930.00
157 773
269.08 503.92
329.8432 174.0768
382.5923 0