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PV and FV of Single Sum, Annuity and Perpetuity

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?

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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