Exercises / Finance and business maths · 9 of 14
Lump sum or yearly payments?
PV(rate, periods, payment) is what a stream of future payments is worth today. Money later is worth less than money now, so the PV is smaller than the plain total.
Your taskA prize pays B1 at the end of each year for B3 years. In B5, use PV to work out what those payments are worth today at the discount rate in B2, as a positive number.
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| Row | A | B |
|---|---|---|
| 1 | Yearly payment | $50,000.00 |
| 2 | Discount rate | 5% |
| 3 | Years | 20 |
| 4 | ||
| 5 | Worth today |