Table 6-15 Calculating the present value of the last cash flow
Add the results of 'Step 2' and 'Step 3'.
Table 6-16 Calculating the present value of lease
Amortization is the process of dividing a payment into the amount that applies to interest and
the amount that applies to principal. Payments near the beginning of a loan contribute more
interest, and less principal, than payments near the end of a loan.
Time Value of Money Calculations
Stores zero payment for this step
- 1 5,000.00
Stores value to discount.
Calculates the present value of
last cash flow.
Calculates the present (capitalized)
value of lease. (Rounding
discrepancies are explained on
Figure 16 Graph