Question

Rental - 2229/ month, Terms - 15 months, Discount rate - 2.5%, Present Value = 33,000.52 my question is how to get the answer of present value 33,000.52

Answer 1

Assumed that rent is paid at the begining of the month.

So to calcualte the present value we need to convert this disount rate given as 2.5% Per annum into per month rate

=2.5%/12=0.208% per month

calculation to show the discounted value

Month	Rent(A)	Present value factor 0.208% (B)	Present value(A*B)
1	2229	1=(1/(1+0.208%)^0	2229
2	2229	0.998=(1/(1+0.208%)^1	2224.542
3	2229	0.996=(1/(1+0.208%)^2	2220.084
4	2229	0.994=(1/(1+0.208%)^3	2215.626
5	2229	0.992=(1/(1+0.208%)^4	2211.168
6	2229	0.99=(1/(1+0.208%)^5	2206.71
7	2229	0.988=(1/(1+0.208%)^6	2202.252
8	2229	0.986=(1/(1+0.208%)^7	2197.794
9	2229	0.984=(1/(1+0.208%)^8	2193.336
10	2229	0.982=(1/(1+0.208%)^9	2188.878
11	2229	0.98=(1/(1+0.208%)^10	2184.42
12	2229	0.978=(1/(1+0.208%)^11	2179.962
13	2229	0.976=(1/(1+0.208%)^12	2175.504
14	2229	0.974=(1/(1+0.208%)^13	2171.046
15	2229	0.972=(1/(1+0.208%)^14	2166.588
		Total	33000.52