2: TVM and Amortization Worksheets 47
Example: Present Value of Lease Payments
Procedure Keystrokes Display
Set all variables to defaults.
&
}
!
RST 0.00
Set payments per year to 1.
&
[
1
!
P/Y= 1.00
Set beginning-of-period
payments.
&
]
&
V
BGN
Return to calculator mode.
&
U
0.00
Enter number of periods.
5
,
N= 5.00
Enter periodic interest rate at
which your firm can borrow.
15
-
I/Y= 15.00
Enter annual lease payment.
36000
S
/
PMT= -36,000.00
Compute present value of
lease payments.
%
.
PV= 138,779.22
The present value of the lease payments is greater than the
purchase price of $125,000, so it would be best to buy the server
outright.
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