# Calculate the present value of $100,000 in the given cases

Using the present value function in MS Excel, verify that the present value of $100,000 to be received in five years at an interest rate of 16%, compounded annually, is $47,610. Calculate the present value of $100,000 for each of the following items (parts a-f) using these facts:

a. Interest is compounded semiannually

b. Interest is compounded quarterly

c. A discount rate of 12% is used

d. A discount rate of 20% is used

e. The cash will be received in three years

f. The cash will be received in seven years

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#### Solution Preview

Please refer attached file for better clarity of functions in MS Excel.

Future Value=FV=100,000

Number of periods=NPER= 5

Interest Rate=RATE=16%

Periodic Payment=PMT=0

Type of payment=0

PV can be found by using PV function in MS Excel.

PV= $47,611 =-PV(D8,D7,D9,D6,D10)

Ignoring rounding off errors , we received the same value as given.

a. Interest is compounded semiannually

Future Value=FV=100,000

Number of periods=NPER=5*2=10

Interest ...

#### Solution Summary

This solution describes the steps to calculate the present values in the given cases, using Excel calculations.