Calculate for the cells highlighted in yellow Time Value of Money problems For these problems where interest rate is needed use: 7% Annual investment 2,500 Life of investment (years) 10 #7 Future value Price of car 2$ 12,000 Down payment 20% Life of loan (years) 3 # 8 Monthly payment Amount to be received at maturity $ 25,000 Number of years Amount of annual payment 10 #9 Year: 1 Cash flows 4. (10,000) 2500 2500 2500 2500 2500 #10 Net present value:

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A: 4) using excel PV function to calculate the principal in last installment

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.