CMA Intermediate · Financial Management and Business Data Analytics · Time Value of Money
An analyst in a Mumbai brokerage builds a spreadsheet to find the present value of a stream of equal year-end payments. Which spreadsheet function with an argument type of 0 treats payments as ordinary annuity payments?
The PV function is correct. It accepts rate, number of periods, payment and a type argument, where 0 denotes end-of-period payments, an ordinary annuity, and 1 denotes beginning-of-period payments, an annuity due.
- APVCorrect
- BCOUNTIF
- CVLOOKUP
- DSTDEV
Explanation
The PV function takes rate, nper, pmt, fv and type; type 0 means payments at period end (ordinary annuity) and 1 means start of period. The other functions do not discount cash flows.
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