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14: Additional Examples 199
File name : English-M02-1-040308(Print).doc Print data : 2004/3/9
(For the
operator press
@u
.)
PV = loan amount, or present value.
PMT = monthly payment amount.
I%YR = annual (Canadian) interest rate as a percent.
N = total number of payment periods for the life of the loan.
FV = remaining balance, or future value.
For instructions on entering Solver equations, see “Solving Your Own
Equations,” on page 29.
Advance Payments (Leasing)
Occasionally payments are made in advance, such as in leasing.
Leasing agreements sometimes call for the extra payments to be made
when the transaction is closed. A residual value (
salvage value) can also
exist at the end of the normal term.
The following equation calculates the monthly payment and the annual
yield when one or more payments are made in advance. It can be
modified to accommodate periods other than monthly by changing the
number 12 to the appropriate number of payment periods per year.
Remember the cash-flow sign convention: money paid out is negative,
money received is positive.
A Solver Equation for Advance Payments:
(For the
character press .)
PMT = the monthly payment amount.
PV = the value of the equipment.
FV = the residual value.