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Formula For Pv Factor

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  • Formula For Pv Factor

    Which formula should I use to look for the present value factor if I have the interest rate and the # of periods. Please see attached file.

    Thanks in advance
    Attached Files

  • #2
    Re: Formula For Pv Factor

    Do you have the payment made each period?
    Reafidy

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    • #3
      Re: Formula For Pv Factor

      Yes, the payments are on the attached.

      Tks

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      • #4
        Re: Formula For Pv Factor

        So for the first row is this correct?

        Interest Rate = 5%
        No of periods will be = 12 as its 30/06/02007 - 30/06/2008
        Payment per month = 846,540.92

        Is that correct?
        Reafidy

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        • #5
          Re: Formula For Pv Factor

          What is the mathematical formula to get this factor?
          .

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          • #6
            Re: Formula For Pv Factor

            Originally posted by ByTheCringe2
            What is the mathematical formula to get this factor?
            It appears to be E column / C column. Which doesnt really make sense?

            Anyway that means you need to calculate the present value which is why I asked the questions above. i think I may be off track tho.

            More details would be nice.
            Reafidy

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            • #7
              Re: Formula For Pv Factor

              enter the following formula in J7 and copy down:

              J7: =ROUND(1/(1+$J$4)^$G7,4)

              filippo

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              • #8
                Re: Formula For Pv Factor

                The formula worked.

                Thanks

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                • #9
                  Re: Formula For Pv Factor

                  Originally posted by filo65
                  enter the following formula in J7 and copy down:

                  J7: =ROUND(1/(1+$J$4)^$G7,4)

                  filippo
                  Well done, howd you come up with that?
                  Reafidy

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                  • #10
                    Re: Formula For Pv Factor

                    Reafidy,

                    -concerning the round is because the data mgiv provided had only 4 digits
                    -concerning the formula, it depends: up to one/one and a half years, it's normally used the simple actualization, that is = C / (1 + r% * dt ) ( they are normaly deposit rates calculated normally on a ACT/360 day basis ); above the one year mark ( market convention ) one normally switch to a compound actualization = C * (1 + r% )^t, because you assume the capital to be reinvested at same rate for the time t ( day convention: ACT/ACT, 30/360, etc. ) which actually is not the case, but it's easy and fast to calculate ( basically it assumes a flat yield curve ). Normally in financial markets on the base of deposit, futures and swap rates, one calculate a zero curve ( with the bootstrapping method ) and from there a REAL the discount curve, for each maturity.
                    having that you can calculate the pv any of your investments.

                    filippo

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                    • #11
                      Re: Formula For Pv Factor

                      Oh, that formula, LOL
                      .

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                      • #12
                        Re: Formula For Pv Factor

                        Originally posted by filo65
                        Reafidy,

                        -concerning the round is because the data mgiv provided had only 4 digits
                        -concerning the formula, it depends: up to one/one and a half years, it's normally used the simple actualization, that is = C / (1 + r% * dt ) ( they are normaly deposit rates calculated normally on a ACT/360 day basis ); above the one year mark ( market convention ) one normally switch to a compound actualization = C * (1 + r% )^t, because you assume the capital to be reinvested at same rate for the time t ( day convention: ACT/ACT, 30/360, etc. ) which actually is not the case, but it's easy and fast to calculate ( basically it assumes a flat yield curve ). Normally in financial markets on the base of deposit, futures and swap rates, one calculate a zero curve ( with the bootstrapping method ) and from there a REAL the discount curve, for each maturity.
                        having that you can calculate the pv any of your investments.

                        filippo
                        Thanks Filo, crystal clear.
                        Reafidy

                        Forum Rules | Anatomy Of A Good Thread Title | What Have You Tried So Far? | Are You A Cross Poster?

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