PROBLEM:

  PQR Corp. has a trade receivable of $50,000 that is due in 60 days. The company uses a discount rate of 10%. Calculate the present value of the trade receivable.

Solution:

PV of trade receivable = $50,000 / (1 + 10% x (60/365)) = $48,647.06

Here are the working calculations for the PV of trade receivable using tabulation:

To calculate the present value of the trade receivable, we use the formula:

PV of trade receivable = Amount of trade receivable / (1 + Discount rate)

In this case, the amount of the trade receivable is $50,000 and the discount rate is 10% multiplied by (60/365), or 1.644%. Substituting these values into the formula, we get:

PV of trade receivable = $50,000 / (1 + 1.644%)

Simplifying the equation, we get:

PV of trade receivable = $50,000 / 1.01644

PV of trade receivable = $48,647.06

Therefore, the present value of the trade receivable is $48,647.06.

To calculate the PV of trade receivable in Microsoft Excel, you can use the PV function. Here are the steps:

1. Open a new Excel worksheet.
2. In cell A1, enter "Amount of trade receivable" (without quotes).
3. In cell A2, enter "Discount rate" (without quotes).
4. In cell A3, enter "PV of trade receivable" (without quotes).
5. In cell B1, enter the amount of the trade receivable, which is $50,000.
6. In cell B2, enter the discount rate, which is 10% multiplied by (60/365), or 1.644%.
7. In cell B3, enter the following formula to calculate the present value of the trade receivable:

=PV(B2,60,B1)

The PV function takes three arguments: the rate, the number of periods, and the payment amount. In this case, the rate is B2 (the discount rate), the number of periods is 60 (assuming a 60-day credit period), and the payment amount is B1 (the amount of the trade receivable).

1. Press Enter to calculate the PV of trade receivable.

The result should be $48,647.06, which is the same as the manual calculation we did earlier.