Time Value of Money Calculations74
Step 4
Add the results of ’Step 2’ and ’Step 3’.
Amortization
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.
Figure 16 Graph
:Ì
0.00 Stores zero payment for this step
of solution.
JV:::yÉ
-15,000.00 Stores value to discount.
Ï
10,479.21 Calculates the present value of
last cash flow.
Table 6-16 Calculating the present value of lease
Keys Display Description
1p4
108,356.77 Calculates the present (capitalized)
value of lease. (Rounding
discrepancies are explained on
page 67.)
Table 6-15 Calculating the present value of the last cash flow
Keys Display Description
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