JJJ is renting a storefront. The lease is for 6 years, and the monthly rent is $3,000 until the lease ends. The first payment is due today. Calculate the present value of the entire stream of payments if the APR is 8%, continuously compounded.
JJJ is renting a storefront. The lease is for 6 years, and the monthly rent is $3,000 until the lease ends. The first payment is due today. Calculate the
In the above question to calculate the present value of payments we will use Present value function in excel. Just simply type =PV in excel to start the function
Formula:
=PV(Rate,nper,pmt,fv)
Rate=8%/12 (Annual rate of return)
We will divide rate by 12 as we are compounding monthly.
Nper=6*12 (Number of years)
We will multiply Years with 12 as we are compounding monthly and need value in months
Pmt=3000 (Given) (Monthly payments)
(we will not divide it by 12 as we are already given monthly payments)
fv=0 (not given)
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