Trying to figure out the discounted present value of 627,000 with a discount rate of 7% and 132paymentsof4,750

Question

Trying to figure out the discounted present value of 627,000 with a discount rate of 7% and 132paymentsof4,750

Answer 1

Ok...I have been out of school for awhile but here it goes.



NPV of 627K with monthly installments of 4750, thus calculated on monthly basis would be $65,700.94 (annual- $67,774.23).



Formula -

Sum of:

PMT1/(((1+(i/12))^(Pd*12)) + PMT2/(((1+(i/12))^(Pd*12))+ PMT3/(((1+(i/12))^(Pd*12)) + ...PMT132/(((1+(i/12))^(Pd*12))



Read -

The summation of each payment divided by 1 over the discount rate divided by 12, to the power of the # of period you are in times 12.



or on annual basis,

Sum of:

PMT1/((1+i)^(Pd)) + PMT2/((1+i)^(Pd)) + PMT3/((1+i)^(Pd)) + ...PMT11/((1+i)^(Pd))



PMT = 4750

Pd = 1-132 (monthly)

Pd = 1-11 (annually)

i = Discount Rate of .07