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1:35 7:17 Suggested clip Compute the Present Value of Minimum Future Lease Payments YouTubeStart of suggested client of suggested clip Compute the Present Value of Minimum Future Lease Payments
To calculate a payment the number of periods (N), interest rate per period (in) and present value (PV) are used. For example, to calculate the monthly payment for a 5 year, $20,000 loan at an annual rate of 5% you would need to: Enter 20000 and press the PV button. Enter 5 and then divide by 12.
2:20 7:36 Suggested clip Excel Tips and Tricks: Present Value of Multiple Uneven Cash Flows YouTubeStart of suggested client of suggested clip Excel Tips and Tricks: Present Value of Multiple Uneven Cash Flows
Present value is the concept that states an amount of money today is worth more than that same amount in the future. In other words, money received in the future is not worth as much as an equal amount received today. Receiving $1,000 today is worth more than $1,000 five years from now.
P4 Present Value Formula SUM[P/(1+r)n] = the total amount paid over the lease term, discounted for the interest rate.
1:35 7:17 Suggested clip Compute the Present Value of Minimum Future Lease Payments YouTubeStart of suggested client of suggested clip Compute the Present Value of Minimum Future Lease Payments
The formula for finding the net present value of future lease payments on a contract is: (PV) = C * [(1 — (1 + i)^ — n) / i]. PV = present value, C = the cash flow each period, i = the prevailing interest rate and n = number of lease payments.
Minimum lease payments are rental payments over the lease term including the amount of any bargain purchase option, premium, and any guaranteed residual value, and excluding any rental relating to costs to be met by the lessor and any contingent rentals.

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