Present Value question using Excel?

Question

Which Function to use in Excel?

The problem reads: "What is the PV of a $100 payment, if that payment is to be received annually forever in a 10% environment. Use a 10% discount rate."

I found XNPR but since the problem has no date, I'm not sure what to put in there. Is there some number in Excel that represents "forever" or "infinity"? Or is there another function I should be using?

The professor didn't go over how to do this one last night. I don't need the answer, I just need to know how to get the answer in Excel...not looking for someone to do my homework just someone to help me do it. Thanks!

Answer 1

Go to Excel and look for the funny little " fx " just under the tool bars, sometimes it is hard to see, but it is there. Double click the "fx". Click the down arrow next to "or select a category". Click on Financial. In "Select a function" down arrow until you find PV. The variable entry box will pop up, enter your variables. That's how you find PV.

However, this is not an ordinary PV problem. The problem is really a "perpetuity" problem.

Look in your book under "perpetuities". Use the formula for perpetuities. There is no date involved with perpetuities.  Infinity is built into the equation.