Table 6-15 Calculating the present value of the last cash flow

Keys

Display

Description

 

 

 

:Ì

0.00

Stores zero payment for this step

 

of solution.

 

 

 

JV:::yÉ

-15,000.00

Stores value to discount.

 

 

 

Ï

10,479.21

Calculates the present value of

 

last cash flow.

 

 

 

Step 4

Add the results of ’Step 2’ and ’Step 3’.

Table 6-16

Calculating the present value of lease

 

 

 

 

 

Keys

 

Display

Description

 

 

 

 

1p4

108,356.77

Calculates the present (capitalized)

 

value of lease. (Rounding

discrepancies are explained on page 67.)

Amortization

Amortization is the process of dividing a payment into the amount that applies to interest and the amount that applies to principal. Payments near the beginning of a loan contribute more interest, and less principal, than payments near the end of a loan.

Figure 16 Graph

74 Time Value of Money Calculations