Question

How much would you have to invest today to receive a. $15,000 in 8 years at 6 percent? b. $20,000 in 12 years at 8 percent? c. $6,000 each year for 5 years at 10 percent? d. $50,000 each year for 20 years at 12 percent?

Answer 1

Investment amount would be sum of present value of future cash flows.
Present value of $15,000 in 8 years at 6 percent		$       9,411.19
Present value of $20,000 in 12 years at 8 percent		$       7,942.28
Present value of $6,000 each year for 5 years at 10 percent		$     22,744.72
Present value of $50,000 each year for 20 years at 12 percent		$ 3,73,472.18
Total		$ 4,13,570.36
So, Investment amount is $ 4,13,570.36
Working:
Present value of $15,000 in 8 years at 6 percent		=-pv(rate,nper,pmt,fv)			Where,
		$       9,411.19			rate	=	6%
					nper	=	8
					pmt	=	0
					fv	=	$ 15,000.00
Present value of $20,000 in 12 years at 8 percent		=-pv(rate,nper,pmt,fv)			Where,
		$       7,942.28			rate	=	8%
					nper	=	12
					pmt	=	0
					fv	=	$ 20,000.00
Present value of $6,000 each year for 5 years at 10 percent		=-pv(rate,nper,pmt,fv)			Where,
		$     22,744.72			rate	=	10%
					nper	=	5
					pmt	=	$   6,000.00
					fv	=	0
Present value of $50,000 each year for 20 years at 12 percent		=-pv(rate,nper,pmt,fv)			Where,
		$ 3,73,472.18			rate	=	12%
					nper	=	20
					pmt	=	$ 50,000.00
					fv	=	0