$15,000 paid in ten equal payments of $1,500 over the next ten years,
paid at the beginning of the year would be worth what amount today?
Let us assume a 3% inflation rate. Please explain in language suitable
for a non-finance person. Thank you.

---

Request for Question Clarification by livioflores-ga on 16 Oct 2003 19:11 PDT

Please tell us which calculator are you using and may be one of us can
help you with your problem.

livioflores-ga

---

Clarification of Question by uzzz-ga on 17 Oct 2003 10:41 PDT

Hello livioflores-ga

Thank you for your interest in this question. I am using a basic hand
calculator- one with absolutely no extras.

Regards

Uzzz

This is the same exact question you asked before and I answered it in
a comment. Net present value is the value of the stream today.

Thank you research_help-ga. I am trying to figure out how to enter:
$1,500/(1.03)^3 = $1,372.71 into my calculator. This may seem
elementary to some people but not this non-finance, non-excel person.
Any chance of an explanation in plain language? Specifically I would
like to understand the: (1.03)^3 portion of the formula.

Regards

Uzzz

Howdy Uzzz,

This is the process of taking a number to the third power,
or cubing it.  In more generic terms, ith the notation of
"x^y" you would take the number "x" and multiply it by
itself "y" numbers of time, so 1.03^3 is 1.03*1.03*1.03 or
1.092727.

To break it down, multiply 1.03 by 1.03 and you get 1.0609
as a result.  Take 1.0609 and multiply it by 1.03 to get the
result of 1.09272.  Divide 1500 by 1.092727 to get 1372.71
as your final total.

Some calculators, such as the one that comes with Windows XP,
have the "^" notation built in.  If not, you can always do it
the "manual" method shown above.

Looking Forward, denco-ga

Thank you for your explanation of the manual method!

Best regards

Uzzz