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Using the Finance Solver 12-3
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.
hp40g+.book Page 3 Friday, December 9, 2005 1:03 AM