TVM13 - Present Value of an Annuity

Audio Transcript

This is a present value of an annuity problem.

What is the present value of rental receipts of $7,000 to be received at the end of each of the next 6 years when discounted at 11.5%?

First, plug in the known values into the appropriate cells:

The number of periods – NPER – is 6

The interest rate – Rate – is 11.5%

The payment – PMT – is $7,000.00

Going to the formulas tab, look for the PV function.

The function wizard pops up

Select Rate,

Select NPER,

Select PMT

Hit OK

The PV is ($29,192)

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