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Calculating Present Values and Multiple Cash Flows

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1. Calculating Present Values: For each of the following compute the present value. Answer in Excel.

Present Value____Years____Interest Rate____Future Value
?_______________6__________7%_________$13,827
?_______________9__________15__________$43,852
?_______________19_________11__________$725,380
?_______________23_________18__________$590,710

2. Calculating Interest Rates: Solve for the unknown interest rate in each of the following: Answer in Excel
Present Value____Years____Interest Rate____Future Value
$__ 242___________4__________?_________$_____307
$__ 410___________8__________?_______________896
$51,700__________16__________?__________$162,181
$18,750__________27__________?__________$483,500

3. Calculating the Number of Periods: Solve for the unknown number of years in each of the following: Answer in Excel
Present Value____Years____Interest Rate____Future Value
$___625__________?___________9%_______$__1,284
$___810__________?__________11_________$__4,341
$18,400___________?_________17__________$402,662
$21,500___________?__________8__________$173,439

4. Present Value and Multiple Cash Flows: Farley Company has identified an investment project with the following cash flows. Answer in Excel
Year________Cash Flow
__1_________$960
__2_________$840
__3_________ $935
__4________$1,350

a. If the discount rate is 10 percent, what is the present value of these cash flows?
b. What is the present value at 18 present?
c. At 24 percent?

5. Present Value and Multiple Cash Flows: Investment X offers to pay you $4,500 per year for nine years, whereas Investment Y offers to pay you $7,000 per year for five years.
a. Which of these cash flow streams has the higher present value if the discount rate 5 percent? Explain.
b. If the discount rate is 22 percent?

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Solution Summary

Your tutorial is in excel, attached using the PV, RATE, NPER, NPV functions.

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Carol Sargent, PhD
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  • MSc, University of Virginia
  • PhD, Georgia State University
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