Due November 16, 5pm
Instructions: Answer the following time value of money problems in a single Excel worksheet.
You can round to the nearest dollar. You will be instructed on whether you should calculate
your answer long hand applying the formulas in your coursepack; using factors from a PV or FV
table; and/or using Financial Formulas in Excel. Please pay close attention. You must turn in
your answers in an Excel document and show your work. For example, if you used a factor from
a PV or FV table, be sure to include the factor you chose from the table.
1. What is the balance in an account by the end of 3 years if $100,000 is deposited and
interest is 8% per year, compounded annually? Answer this using all three methods: a)
the long hand calculation; b) a formula in Excel; AND c) using a factor from a PV or FV
2. What is the balance in an account at the end of 15 years if $4,500 is deposited today and
the account earns 4% interest compounded semi-annually? Answer this using two
methods: a) a formula in Excel AND b) using a factor from a PV or FV table.
3. If you wish to accumulate $90,000 in 9 years, how much must you deposit today in an
account that pays annual interest rate of 10%, with semi-annual compounding of interest?
Answer this using all three methods: a) the long hand calculation; b) a formula in Excel;
AND c) using a factor from a PV or FV table.
4. If you deposit $19,000 per year for 3 years in an account that pays an annual interest rate
of 6%, what will your account be worth at the end of 3 years? Answer this using all three
methods: a) the long hand calculation; b) a formula in Excel; AND c) using a factor from
a PV or FV table.
5. You decide that you need $65,000 in 8 years in order to make a down payment on a
house. You plan to make semi-annual deposits to achieve your goal. If interest rate is 4%,
how much should be deposited each time? Answer this only using Excel. Hint use the
Financial Function “PMT” to solve for the payment and PV will be zero.
6. You owe $40,000 to your parents for funding some of your college. You promise to make
6 annual payments of $8,000 to settle your debt. Approximately what interest rate are
your parents charging (estimated up to 2 decimal places), if you make the 6 annual
payments beginning one year from now? Answer this only using Excel. Hint use the
Financial Function “RATE”. Note if you need help use the “Help on this function”
feature. This help will include an example for you to follow.
7. You are offered an investment that will pay $32,700 per year for 10 years. If you feel that
the appropriate discount rate is 9%, what is the investment worth to you today? Answer
this only using Excel.
8. Your grandparents offered you some money when you complete ACC 201 this fall. You
are offered the following options. Assuming an annual interest rate of 4.0%, which option
should you choose? Note that you could calculate the future value of all three
investments or the present value. Your choice will be identical. The problem is a bit
easier to process mentally, however, if you do it in terms of present value. Answer this
using two methods: a) a formula in Excel AND b) using a factor from a PV or FV table.
Receive $29,000 immediately
Receive $4,200 at the end of each six months for five years. You will receive the
first check in six months
Receive $4,100 at the end of each year for four years, and then $20,000 at the end
of the fifth year.
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