Give a real-life example of how each of the five calculations can be used in real...

Give a real-life example of how each of the five calculations can be used in real life situations

NPER

RATE

PMT

Solutions

Expert Solution

1. PV- Present value is used in pension fund valuation and lottery payouts and stock price valuation to determine whether to invest or not. The cash inflows of future are discounted to the present.

2.NPER- It is used in number of periods that are required to pay off the loan or reach an investment goal through periodic payments and at an interest rate.

3.RATE- It is used to find a transaction value of two different units. Rate could be used in finding the buying and selling price of different goods in the market.

4.PMT- It helps in calculation of total payments which is inclusive of principal and interest which are required to settle a loan or an investment with a fixed rate over a specific time period.It can be used while taking as loan.

5.FV-It is used to calculatre the future values of present cash flows. It is used in calulation of compounded return while making an investment.It can be used while Making investments through Systematic Investment plans.

jeff jeffy answered 1 year ago

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