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Present Value Analysis
This JavaScript Program allows you to do Present Value analysis on a single
sum. As one example, is it better to receive $100 now or $110 in 5 years, if
inflation is 3.5% a year? To find out, just set Future Value to 110, Term to 5
years, Periodic Rate to .035 and blank out Present Value (blank means "this is
the value to calculate" ). Press "Calculate" and you see that receiving $100 now
is better than receiving $92.62 now (which is what receiving $110 in 5 years at
3.5% inflation is equal to, in today's dollars). You can blank out ANY one of
the four fields (leaving numbers in the other three) and the program will
calculate the value that belongs in the blank field. Of course, you can use any
reasonable number in any field.
This present value calculation can be
used to uncover the true cost of car loans or leases, buying life insurance and
studying investments.
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