Question

In: Finance

1. Wasp Corporation has a loan agreement that provides it with cash today, and the company...

1. Wasp Corporation has a loan agreement that provides it with cash today, and the company must pay $25,000 one year from today, $15,000 two years from today, and $5,000 three years from today. Wasp agrees to pay 10% interest. Using excel compute the present value. Reminder steps are below:

1. Get into excel and go to Fx.

2. Make category financial.

3. In the rate box put the percentage in decimal format.

4. In the Nper (number of periods) put in the year criteria.

5. Pmt is the amount (to get rid of the negative you can make this a negative which will cancel it out.

6. The rest can be blank.

What is the amount of cash that Wasp receives today?

Solutions

Expert Solution

Formula for Present Value

Formula for PV method in Excel is =PV(C10,B13,0,-C13),=PV(C10,B14,0,-C14),=PV(C10,B15,0,-C15)

(If PV Method value for three year is summed up it will shows the present value of Loan amount)

Formula for Manual method in Excel is =C13/(1+C10)^B13,=C14/(1+C10)^B14,=C15/(1+C10)^B15

(If Manual Method value for three year is summed up it will shows the present value of Loan amount)

Both PV & Manual Method will show the same result in excel.

jeff jeffy answered 2 months ago
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