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Seven thousand dollars earning six percent per year and in years you love seven dollars and fifty eight cent snow let’s solve the problem and spreadsheet the time value of money formulas in Excel use five inputs that correspond inputs and outputs for many common time value of money problems rate is the interest rate per period input either as a decimal rapper cent age and is the number of periods.

PM is the amount of a recurring payment in an annuity will cover annuities later in the lecture VS present value his future value this input our values we input % into r in the number of periods and we input a negative seven thousand dollars in the present value the spreadsheet solves our future value and gives us a positive seven dollars and fifty eight cents what about these positives and negatives.

Take the decision makers point of vie wand think of this as decision makers cash inflows and outflows example is an investing problem when you make an investment you pay out of present value and we’re going to get a future value when you make an investment today by purchasing investment asset by making a payment into an account this is a cash outflow from the decision-makers point of view so the present value in an investment is negative cash income you receive from the investment is a cash inflow from the decision-makers point of view so future value in an investment positiveness consider the case of borrowing when you take out a loan to obtain a present value by paying out of future value when the lender gives you the proceeds alone.

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