No, it should decrease, assuming the interest rate is the same.
The present value of a bond's payment
To find the annuity payment for a given investment, you can use the formula: annuity payment investment amount / present value factor. The present value factor is calculated based on the interest rate and the number of periods the investment will last.
"HSBC offers two types of MasterCard, the Premier MasterCard and the Advance MasterCard. Interest rates for each of these are based on the current going rate. At present, the interest rate for the Premier MasterCard is 12.9%. The current interest rate for the Advance MasterCard is 17.9%. For both types of cards, the interest rate will increase by 5% if the minimum monthly payment is not made by the due date."
The interest rate in the annuity formula represents the rate at which your money grows over time. It is calculated by dividing the annual payment by the present value of the annuity, and then adjusting for the number of compounding periods per year.
No, it should decrease, assuming the interest rate is the same.
The interest rate is 8 1/3 because Present Value = Payment/Interest rate Present Value = 48 Payment is 4 Interest Rate = Payment/Present Value = 4/48 = 8.33%
The present value of a bond's payment
The PV function is a financial function. It is used to return the present value of an investment based on an interest rate and a constant payment schedule. The syntax is a follows: PV( rate, number_payments, payment, [FV], [Type] ) Rate is the interest rate for the investment. Number_payments is the number of payments for the annuity. Payment is the amount of the payment made each period. If it is omitted, you have to enter a FV value. FV is optional. It is the future value of the payments. If it is omitted, it is assumed to be 0. Type is optional. It indicates when the payments are due. Type can be one of the following values: 0 for when payments are due at the end of the period, which is the default. 1 for when payments are due at the start of the period. If the Type parameter is left out, the PV function sets the Type value to 0.
decrease
To find the annuity payment for a given investment, you can use the formula: annuity payment investment amount / present value factor. The present value factor is calculated based on the interest rate and the number of periods the investment will last.
"HSBC offers two types of MasterCard, the Premier MasterCard and the Advance MasterCard. Interest rates for each of these are based on the current going rate. At present, the interest rate for the Premier MasterCard is 12.9%. The current interest rate for the Advance MasterCard is 17.9%. For both types of cards, the interest rate will increase by 5% if the minimum monthly payment is not made by the due date."
PV is a function in Excel for returning the present value of an investment based on a constant interest rate and payment schedule.
Present Value (PV)Future Value (FV) Number of periods (n) Interest Rate (i) Payment Amount (PMT)
It gives you the current value of an investment based on a fixed interest rate and payment schedule. See the link below for more information.
The price of the bond decreases; the inflation premium would increase the market interest rate, which in bond valuation is located in the denominator, and the coupon payment rate is located in the numerator. When calculating the NPV of future coupon payments, as the denominator or market interest rate + inflation premium increases, the Net Present Value of future coupon payments decreases and the overall value of the bond decreases as well. The price of the bond decreases; the inflation premium would increase the market interest rate, which in bond valuation is located in the denominator, and the coupon payment rate is located in the numerator. When calculating the NPV of future coupon payments, as the denominator or market interest rate + inflation premium increases, the Net Present Value of future coupon payments decreases and the overall value of the bond decreases as well.
You might be able to use the PMT function. It returns the payment amount for a loan based on an interest rate and a constant payment schedule. You can try different numbers of payments to see what different monthly payments are required.Syntax: PMT(interest_rate,number_payments,PV,FV,Type)interest_rate = interest ratenumber_payments = number of paymentsPV = present value (or principal)FV (optional) = future value (if omitted, the assumed value is 0)Type (optional) = indicates when the payments are due0 = payments due at end of period (default or if not included)1 = payments due at beginning of period