how to find present value?

  • Thread starter Thread starter shital
  • Start date Start date
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shital

hi
i have
Value of property is 100.
Rant Income is 15 per year.
Rant agreement for 12 yr.
int. we borrowing @ 8.25% per yr.
i like to know the present value of income.

Shital
 
Look at NPV function.

For your example, the formula will be:


=NPV(0.085,15,15,15,15,15,15,15,15,15,15,15,15)-100
=10.17

Paul Olson
 
Hi Shital & Paul!

Simpler, using Paul's data is:

=PV(8.5%,12,15,0,0)+100

But rents are usually paid or received in advance so it might be more
appropriate to use Type = 1 for the last argument.

Shital did quote 8.25%.

More precisely, the rent is unlikely to be paid on an annual basis and
assuming an annual effective borrowing rate to discount 15/12 received
monthly in advance:

=PV((1+8.25%)^(1/12)-1,12*12,15/12,0,1)+100
Returns: -16.5178052428925

But check your data on frequency of rent and whether borrowing rate is
annual effective or Nominal or whatever.
 
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