Practical guide

Present value for receivables discounting

Estimate current value of a future receivable under a monthly discount rate.

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Scenario

Receive $180,000 in 18 months with a monthly discount rate of 1.1%.

Inputs

  • FV = 180000
  • n = 18
  • i = 1.1
  • PMT = 0

Key sequence

  1. 1180000 FV
  2. 218 n
  3. 31.1 i
  4. 40 PMT
  5. 5PV

How to read the result

Compare calculated PV with lender offer; a wide gap may signal excessive discount cost.