Example:

The present value of the cash flows, 1796.43x360, at an annual effective rate of 3.815% (which is 3.75% APR) is equal to the present value of getting a lump sum of 1,192,722.06 at the end of the 360 period.

Lump sum at the end

Cash Flows: 0x359,1192722

Cash flow time: 1

Rate: 3.815

Present Value: 387,900

Monthly payments of principle + interest

Cash Flows: 1796.43x360

Cash flow time: 1

Rate: 3.815

Present Value: 387,900

Interest only payments + loan amount at the end of life of loan

Cash Flows: 1212.19x359,389112.19

Cash flow time: 1

Rate: 3.815

Present Value: 387,900