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PV and FV of Single Sum, Annuity and Perpetuity

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1. Present value of single sum problem

You are going to be given $100,000 in 12 years. Assuming an inflation rate of 3.5%, what is the present value of this amount?

2. Perpetuity problem

What is the value of a perpetuity with an annual payment of $100 and a discount rate of 6%?

3. Future value of single sum problem

You put $2,000 in an investment account today which will earn 8% over the next 14 years, what is the future value?

4. Present value of single sum problem

You are going to be given $45,000 in 7 years. Assuming an inflation rate of 2.5%, what is the present value of this amount?

5. Present value of annuity problem

You will receive $1,200 at the end of the next 15 years, assuming an 8% discount rate, what is the present value of the cash flows?

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Solution Summary

This solution illustrates how to solve numerous time value of money problems using Excel functions. It also explains each function and how to translate a problem into each function.

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