Example: value of a lease with uneven payments – Texas Instruments BA II PLUS User Manual
Page 52
48
Cash Flow Worksheet
Computing NPV
Use an interest rate per period (
I
) of 20%.
Answers:
NPV
is $7,266.44.
Computing IRR
Answer: IRR
is 52.71%.
Example: Value of a Lease with Uneven Payments
A lease with an uneven payment schedule usually accommodates
seasonal or other anticipated fluctuations in the lessee’s cash position.
A 36-month lease has the following payment schedule and beginning-of-
period payments.
If the required earnings rate is 10% per 12-month period with monthly
compounding:
•
What is the present value of these lease payments?
To
Press
Display
Access interest rate variable
(
I=
0.00
Enter interest rate per period.
20
!
I=
20.00
Compute net present value.
# %
NPV=
7,266.44
To
Press
Display
Access
IRR
.
)
IRR=
0.00
Compute internal rate of return.
# %
IRR=
52.71
Number of Months
Payment Amount
4
$0
8
$5000
3
$0
9
$6000
2
$0
10
$7000