1. Calculate the value of the investment Calculating Annuity Present Value- Exce
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1. Calculate the value of the investment Calculating Annuity Present Value- Excel FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Paste B 1 u . Im· ?». Alignment Number Conditional Format as Cell Formatting Table" Styles Styles Clipboard Font A1 An investment offers $6,100 per year for 15 years, with the first payment o one year from now. If the required return is 6 percent, what is the value of the investment? What would the value be if the payments occurred for 40 y 75 years? Forever? ccurring ears? For Payment per year # of years Required rate of return # of years # of years 6,100 16 6% 40 75 10 12 Complete the following analysis. Do not hard code values in your calculations. Your answers should be positive. Value today with 15 years payments 59,244.72 Value today with 40 years payments $ 91,782.41 Value today with 75 years payments $ 100,380.67 Value today of perpetuity 13 14 15 16 17 18 19 21Explanation / Answer
Payments per year
PMT
$ 6,100
# of years
NPER
15
Required rate of return
RATE
6%
# of years
NPER
40
# of years
NPER
75
Value today with 15 years of payments
=PV(RATE,NPER,-PMT)
$ 59,244.72
Value today with 40 years of payments
=PV(RATE,NPER,-PMT)
$ 91,782.41
Value today with 75 years of payments
=PV(RATE,NPER,-PMT)
$ 100,380.67
Value today of perpetuity
=PMT/RATE
$ 101,666.67
Payments per year
PMT
$ 6,100
# of years
NPER
15
Required rate of return
RATE
6%
# of years
NPER
40
# of years
NPER
75
Value today with 15 years of payments
=PV(RATE,NPER,-PMT)
$ 59,244.72
Value today with 40 years of payments
=PV(RATE,NPER,-PMT)
$ 91,782.41
Value today with 75 years of payments
=PV(RATE,NPER,-PMT)
$ 100,380.67
Value today of perpetuity
=PMT/RATE
$ 101,666.67
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