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Homework answers / question archive / A man agreed to pay php 1,000 at the end month for 20 years, in purchasing a house
A man agreed to pay php 1,000 at the end month for 20 years, in purchasing a house. Find the present value of this argument if money is worth 12% compounded monthly. Show your solution
Computation of Present Value using PV Function in Excel:
=-pv(rate,nper,pmt,fv)
Here,
PV = Present Value = ?
Rate = 12%/12 = 1% compounded monthly
Nper = 20 years * 12 months = 240 months
PMT = $1,000 per month
FV = 0
Substituting the values in formula:
=-pv(1%,240,1000,0)
PV or Present Value = $90,819.42
