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48 Cash Flow Worksheet
Computing NPV
Use an interest rate per period (I) of 20%.
Answers:
NPV is $7,266.44.
Computing IRR
Answer: IRR is 52.71%.
Example: Value of a Lease with Uneven Payments
A lease with an uneven payment schedule usually accommodates
seasonal or other anticipated fluctuations in the lessee’s cash position.
A 36-month lease has the following payment schedule and beginning-of-
period payments.
If the required earnings rate is 10% per 12-month period with monthly
compounding:
• What is the present value of these lease payments?
To Press Display
Access interest rate variable (
I= 0.00
Enter interest rate per period. 20 !
I=
20.00
Compute net present value. # %
NPV=
7,266.44
To Press Display
Access
IRR. )
IRR= 0.00
Compute internal rate of return. # %
IRR=
52.71
Number of Months Payment Amount
4$0
8 $5000
3$0
9 $6000
2$0
10 $7000