Solved

What is the formula for Present Value in Lease Accounting?

  • 29 September 2021
  • 3 replies
  • 754 views
Carlo Palma
Rank
Userlevel 5
Badge +9

Hi,

 

What is the formula for Present Value in Lease Accounting? I comparing it to the excel PV formula

I don’t seem to get it match?

Any idea?

 

Thanks!

icon

Best answer by Janith Bandara 29 September 2021, 08:25

View original
Carlo
This topic has been closed for comments

3 replies

J
Rank
Userlevel 5
Badge +9

Hi @Carlo Palma 

 

Usually the formula is [1/(1+r)^np] *Lease payment

for an example if the schedule consists of 12 months the PV calculation is as follows

PV calculation of Installment No 1 is 99173.55

It is calculated as follows

1/(1+10%/12)^1=0.9917355

0.9917355*100000=99173.55

PV calculation of Installment No 2 is 98353.94

It is calculated as follows

1/(1+10%/12)^2=0.9835394

0.9835394*100000=98353.94

 

 

BR/Janith

Carlo Palma
Rank
Userlevel 5
Badge +9

Hi @Janith Bandara , 

Thanks for the answer but I getting a different value base on your formula? 

How to do “^1” in a normal calculator? 

 

I’d used google to calculate and this is what I got

 

 

Carlo
J
Rank
Userlevel 5
Badge +9

Hi @Carlo Palma ,

 

You need to divide rate by 12 months to get the monthly compound rate.That is 10%/12

 

10%=0.1

 

 

BR/Janith

 

Terms & ConditionsCookie settings