Present Value In Present-Value Annuities - Texas Instruments BA II PLUS User Manual

Present Value in Present-Value Annuities

Example: Present Value of Cost Savings
The Furros Company purchased a machine that provides
annual savings of $20,000 per year for the next 10 years. Using
an annual discount rate of 10%, compute the present value of
the savings using an ordinary annuity and an annuity due.
• For a present value ordinary annuity:
PV = ?
0
• For a present value annuity due for a leasing agreement:
PV = ?
$20,000
0
40
$20,000
. . .
1
I/Y = 10
$20,000
. . .
1
I/Y = 10
$20,000 $20,000
9 N = 10
$20,000
9 N = 10
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