TIME VALUE WORKSHEET
Define: Time The end of a year or period
MARR Minimum Attractive Rate of Return
Interest %I Rate lender charges to use their money
Discount Rate Is an interest rate, but used to discount FV to PV
Opportunity Cost The cost to use your own money
PV Present Value
FV Future Value
AV Annual Value
PMT Payment, monthly
MV Monthly Value, same as PMT
1. You have $30,000 to buy some cows. If you hold off for 5 years, how much will you
have then at 6% interest?
Time Line:
Convert: PV to FV
Use Table: PV to FV Annual
Calculation: $30,000 x 1.3382 = $40,146
2. The book value of a tractor is $35,000 at the end of year 7. At 8% MARR, this would
compensate for how much of its price?
Time Line:
Convert: FV to PV
Use Table: FV to PV Annual
Calculation: $35,000 x 0.5835 = $20,422
