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Using the Finance Solver 10-3
modes: Begin mode and End mode. The following cash
flow diagram shows lease payments at the beginning of
each period.
The following cash flow diagram shows deposits into an
account at the end of each period.
As these cash-flow diagrams imply, there are five TVM
variables:
PV
1
23
4
5
FV
Capitalized
value of
lease
}
PMT PMT PMT PMTPMT
PV
1
23
4
5
FV
PMT PMT PMT PMT PMT
N The total number of compounding periods
or payments.
I%YR The nominal annual interest rate (or
investment rate). This rate is divided by
the number of payments per year (P/YR)
to compute the nominal interest rate per
compounding period -- which is the
interest rate actually used in TVM
calculations.
PV
The present value of the initial cash flow.
To a lender or borrower, PV is the amount
of the loan; to an investor, PV is the initial
investment. PV always occurs at the
beginning of the first period.