Present value Analysis

[Idrahaje]

Does anyone know how I can do a present value analysis in Excel. I believe this utilizes the "Factor" function, but I am not certain how to do this. Any help please.

 

[MattSmithProg]

Present Value is a function already built in to Excel.

It is the function PV.

It is supposed to return the Present Value of an investment. It shows the total amount of future payments is worth now.

If this is not what you are after let me know and I can see if I can help some more Matt Smith

No two nulls are the same

 

[Idrahaje]

Still need help in trying to get this Excel document to function correctly. I had to manually insert the figures. I have looked at the PV function and am not sure where to insert the data correctly. Hopefully this makes since.
Bruce

Equipment Lease Alternation
Five-year lease of computer hardware, as follows:
(Note: Assume a 12% discount rate)

Option 1 $4,000 in one lump sum paid at the beginning of the five-year lease

Option 2 5000 in five equal payments paid at the beginning of each year

Year 1 Year 2 Year 3 Year 4 Year 5 Total
Option 1 $4,000.00
Factor 1.000
PV of lease cost $4,000.00 $4,000.00

Option 2 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Factor 1 0.893 0.797 0.712 0.636
PV of lease cost $1,000.00 $893.00 $797.00 $712.00 $636.00 $4,038.00

 

[waikityu]

For option 2, here is the formula that would get you the present value of $1,000 annual payments for five years

=pv([discount rate], [number of payments], [payment amount], [future value if any], [1 for beginning of period payments; 2 fo end of period payments])

=PV(12%,5,-1000,0,1)