# Financial Valuation and Quantitative Techniques Excel Template Problem Sets (2 Assignments)

*label*Mathematics

*timer*Asked: Nov 3rd, 2017

*account_balance_wallet*$30

### Question Description

Hello I am currently in a graduate master's program business math course and I have two excel template problem sets that are posted that deals with problems with regards to annuities and financial investments for the most part. Math has never been a strong point and I would really appreciate any help I can receive on this for better understanding.

**Side Note: **If possible, I would kindly request also a separate "word document" to see how each problem got solved for better understanding of how to set up financial math problems when it comes to deriving the solution for each one that I am struggling with for both these two different excel problem set assignments.

**Purpose of Assignment**** (First Assignment "Financial Valuation (Time-Value of Money Cases)" Excel template attached below.**

The purpose of this assignment is to provide students an opportunity to apply the concepts of time value of money covered in Ch. 13 to integrated case studies.** **

**Assignment Steps**

**Resources: **Financial Valuation (Time-Value of Money) Cases Excel^{®} Template

**Save** the Financial Valuation (Time-Value of Money) Cases Excel^{®} Template to your computer.

**Read** the instructions on the first tab.

**Complete** the three cases located in the template.

**Click** the Assignment Files tab to submit your assignment.

**Purpose of Assignment**** (Second Assignment "Quantitative Techniques in Financial Valuation Problem Set") Excel template attached below**

The purpose of this assignment is to provide students an opportunity to practice and learn the time-value of money concepts covered during Week 4. Students will understand how to evaluate future values, present values, interest rates, and time periods for financial investments.

**Assignment Steps**

**Resources: **Quantitative Techniques in Financial Valuation Problem Set Excel^{® }Template

**Save** the Quantitative Techniques in Financial Valuation Problem Set Excel^{® }Template to your computer.

**Read** the instructions on the first tab.

**Complete** the twelve exercises located in the template and record your answers in the highlighted spaces.

**Format** your paper consistent with APA guidelines.

**Click** the Assignment Files tab to submit your assignment.

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## Tutor Answer

Attached.

Barry learned in an online investment course that he should start investing as soon

as possible. He had always thought that it would be smart to start investing after he

finishes college and when his salary is high enough to pay the bills and to have money

left over. He projects that will be 5–10 years from now. Barry wants to compare the

difference between investing now and investing later. A financial advisor who spoke

to Barry suggested that a Roth IRA (Individual Retirement Account) would be a good

investment for him to start.

1. If Barry purchases a $2,000 Roth IRA when he is 25 years old and expects to

earn an average of 6% per year compounded annually over 35 years (until he is

60), how much will accumulate in the investment?

Initial Investment (PV)

Quoted Rate

Compounding Frequency

Number of compoundings (m)

Quoted Rate divided by m = RATE

Number of Years

NPER (Num. of years * m)

Ending Amount (FV)

$2.000

6,00%

Annually Choose one

1

For Quarterly, type 4; for semiannually, type 2; for annually, ty

6,0000%

35

35

$15.372,17

2. If Barry doesn’t put the money in the IRA until he is 35 years old, how much

money will accumulate in the account by the time he is 60 years old using the same

return of 6%? How much less will he earn because he invested 10 years later?

Initial Investment (PV)

Quoted Rate

Compounding Frequency

Number of compoundings (m)

Quoted Rate divided by m = RATE

Number of Years

NPER (Num. of years * m)

Ending Amount (FV)

$2.000

6,00%

Annually

1

6,0000%

25

25

$8.583,74

Difference in amount earned

FV Part 1 minus FV Part 2

$6.788,43

Choose one

For Quarterly, type 4; for semiannually, type 2; for annually, ty

3. Barry knows that the interest rate is critical to the speed at which your investment grows.

For instance, if $1 is invested at 2% compounded annually, it takes approximately 34.9 years

to double. If $1 is invested at 5% compounded annually, it takes approximately

14.2 years to double.

Determine how many years it takes $1 to double if invested at 10% compounded annually; at

12% compounded annually.

Present value (PV)

Future value (FV)

1

2

1

2

Qouted rate

Number of years

10%

7,2725

12%

6,1163

4. At what interest rate would you need to invest to have your money double

in 10 years if it is compounded annually?

PV

FV

NPER

RATE

$2.000

$4.000

10

7,18% -- Use the RATE function in Excel. PV should be negative, FV sho

ually, type 2; for annually, type 1; for monthly, type 12; for daily, type 365

ually, type 2; for annually, type 1; for monthly, type 12; for daily, type 365

Abdol Akhim has just come from a Personal Finance class where he learned that he

can determine how much his savings will be worth in the future. Abdol is completing

his two-year business administration degree this semester and has been repairing

computers in his spare time to pay for his tuition and books. Abdol got out his savings

records and decided to apply what he had learned. He has a balance of $1,000 in a

money market account at First Savings Bank, and he considers this to be an emergency

fund. His instructor says that he should have 3–6 months of his total bills in an

emergency fund. His bills are currently $700 a month. He also has a checking account and a

regular savings account at First Savings Bank, and he will shift some of his funds from

those accounts into the emergency fund. One of Abdol’s future goals is to buy a house.

He wants to start another account to save the $8,000 he needs for a down payment.

1. How much interest will Abdol receive on $1,000 in a 365-day year if he keeps

it in the money market account earning 1.00% compounded daily?

Initial Investment (PV)

Quoted Rate

Compounding Frequency

Number of compoundings (m)

Quoted Rate divided by m = RATE

Number of Years

NPER (Num. of years * m)

Ending Amount (FV)

Compound Interest

$1.000

1,00%

Daily

365

0,0027%

1

365

$1.010,05

$10,05

Choose one

For Quarterly, type 4; for semiannually, type 2; for annually

2. How much money must Abdol shift from his other accounts to his emergency fund

to have four times his monthly bills in the account by the end of the year?

Desired Emergency fund

Current balance in money mkt.

Interest that Abdol will earn

Balance to be transferred

$2.800

$1.000

$10,05

$1.789,95

3. Abdol realizes he needs to earn more interest than his current money market can provide.

Using annual compounding on an account that pays 5.5% interest annually, find the amount

Abdol needs to invest to have the $8,000 down payment for his house in 5 years.

Future Value Needed (FV)

Quoted Rate

Compounding Frequency

Number of compoundings (m)

Quoted Rate divided by m = RATE

Number of Years

NPER (Num. of years * m)

Amount Invested Now (PV)

$8.000

5,5%

Annually

1

5,5000%

5

5

$6.121,07

Choose one

For Quarterly, type 4; for semiannually, type 2; for annually

4. Is 5.5% a realistic rate for Abdol to earn in a relatively short-term investment of 5 years, particularly at his bank?

Hint: For answering this question, explore how much interest do banks pay on short-term investments or CDs.

Compare this number with 5.5% to see whether it is a realistic goal. If not, propose to Abdol what should he invest in

instead.

Abdols compounding account that pays 5.5% in a short term investment of

5 years is no realistic. After exploring the interest rate which banks pay on a

short-term investment or CDs, its concluded that the nations average rate is

about 2.10% annually. In comparing the 5.5% rate to the 2.10% rate there

is a 3.4% rate difference. In order for Abdol to obtain $8,000 he would have

to invest $7,210.43 and that is the 2.10% rate annually for 5 years.

Future Value Needed (FV)

Quoted Rate

Compounding Frequency

Number of compoundings (m)

Quoted Rate divided by m = RATE

Number of Years

NPER (Num. of years * m)

Amount Invested Now (PV)

$8.000

2,1%

Annually

1

2,1000%

5

5

$7.210,43

ually, type 2; for annually, type 1; for monthly, type 12; for daily, type 365

ually, type 2; for annually, type 1; for monthly, type 12; for daily, type 365

At 45 years of age, Seth figured he wanted to work only 10 more years. Being a full-time landlord had a lot

of advantages: cash flow, free time, being his own boss—but it was time to start thinking toward retirement.

The real estate investments that he had made over the last 15 years had paid off handsomely. After selling a

duplex and paying the associated taxes, Seth had $350,000 in the bank and was debt-free. With only 10 years

before retirement, Seth want...

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