Example 1: Present Value (PV) of a Future Single Sum

A client has a desired retirement savings goal of $2 million to be

achieved 7 years from now. She plans on making only one deposit

into her account, and an annual return of 6% per year is expected.

Example 3: Present Value (PV) of a Series of Equal Payments

Your client signed a lease agreement for equipmet, and you need to

evaluate if the client capitalized an appropriate amount realted to the

lease. The agreement requires 4 annual lease payments of $25,000

at the beginnign of each year, and an 8% annual interest rate is

appropriate.

Example 2: Present Value (PV) of a Future Single Sum
A client purchased equipment and signed a note promising to pay
the equipment manufacturer $100,000 at he end of 4 years. The
client asked you to help determine the amount that should be
recorded as the cost of the equipment, assuming the cost of capital
(i.e. the annual discount interest rate) is 6%.