Answer To: Sheet1 Time value of money a. Finding FV Investment (PV)$1,000 Interest rate (I)12% Number of...
Akshay Kumar answered on Sep 06 2021
Sheet1
Time value of money
a. Finding FV
Investment (PV) $1,000
Interest rate (I) 12%
Number of years (N) 6 Formula
Future value (FV) $1,973.82 =-FV(B5,B6,,B4)
b. Creating a table with FVs at various interest rates and time periods using Data Table Formulas
Year (B6) Interest Rate (B5) Year (B6) Interest Rate (B5)
$1,973.82 0% 6% 25% =B7 0% 6% 25%
0 $1,000.00 $1,000.00 $1,000.00 0 {=TABLE(B5,B6)} {=TABLE(B5,B6)} {=TABLE(B5,B6)}
1 $1,000.00 $1,060.00 $1,250.00 1 {=TABLE(B5,B6)} {=TABLE(B5,B6)} {=TABLE(B5,B6)}
2 $1,000.00 $1,123.60 $1,562.50 2 {=TABLE(B5,B6)} {=TABLE(B5,B6)} {=TABLE(B5,B6)}
3 $1,000.00 $1,191.02 $1,953.13 3 {=TABLE(B5,B6)} {=TABLE(B5,B6)} {=TABLE(B5,B6)}
4 $1,000.00 $1,262.48 $2,441.41 4 {=TABLE(B5,B6)} {=TABLE(B5,B6)} {=TABLE(B5,B6)}
5 $1,000.00 $1,338.23 $3,051.76 5 {=TABLE(B5,B6)} {=TABLE(B5,B6)} {=TABLE(B5,B6)}
Creating a graph with years on the horizontal axis and FV on the vertical axis
c. Finding PV
Future value (FV) $1,000
Discount rate (I) 12%
Number of years (N) 6 Formulas
Present value (PV) $506.63 =-PV(C41,C42,,C40)
d. Finding the rate of return provided by the security
Cost of security (PV) $1,000
Future value of security (FV) $2,000
Number of years (N) 6
Rate of return (I) 12.25% =RATE(C48,,C46,-C47)
e. Calculating the number of years required to double the population
Current population in millions (PV) 37.6
Growth rate (I) 4%
Doubled population in millions (FV) 75.2 =C52*2
Number of years required to double (N) 18 =NPER(C53,,C52,-C54)
f. Finding the PV and FV of an ordinary annuity
Annuity (PMT) $1,000
Interest rate (I) 18%
Number of years (N) 6
Present value of ordinary annuity...