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Topic: Present Value of future money


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Subject:   Present Value of future money
Author: Bill
Date: Dec 3 2003
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I'm familiar with the use of PV and FV functions in MS Excel. My probem is this:
a person is entitled to $1599/month benefits for 3.7 yrs until retirement;
post-retirement, the benefit reduces to $849/month. Using the PV function, I
calculate the PV of the post-retirement benefits at $109,407. However, that
calculation assumes the PV is being calculated on the day the reduced benefit
COMMENCES. I need to know how to calculate the PV TODAY, 3.7 years before it
begins.
I'm using a discount rate of 5%.
Does anyone have some insight to how I can approach this calculation using
functions available in Excel?
Bill Boynton

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