Share
Explore BrainMass

Finance Calculations using Excel: Future Value and Present Value

1. You want to buy a car, and a local bank will lend you $ 20,000. The loan would be fully amortized over 5 years ( 60 months), and the nominal interest rate would be 12%, with interest paid monthly. What is the monthly loan payment? What is the loan's EFF%?
2. Your parents will retire in 15 years. They currently have $ 230,000, and they think they will need $ 1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?
3. If you deposit $ 12,000 in a bank account that pays 8% interest annually, how much will be in your account after 5 years?
4. What is the present value of a security that will pay $ 85,000 in 20 years if securities of equal risk pay 4% annually?
5. Assume that 1 year from now you plan to deposit $ 1,000 in a savings account that pays a nominal rate of 8%.
a. If the bank compounds interest annually, how much will you have in your account 4 years from now?
b. What would your balance be 4 years from now if the bank used quarterly com-pounding rather than annual compounding?
c. Suppose you deposited the $ 1,000 in 4 payments of $ 250 each at the end of Years 1, 2, 3, and 4. How much would you have in your account at the end of Year 4, based on 8% annual compounding?
d. Suppose you deposited 4 equal payments in your account at the end of Years 1, 2, 3, and 4. Assuming an 8% interest rate, how large would each of your pay-ments have to be for you to obtain the same ending balance as you calculated in part a?

Solution Preview

Your tutorial is in excel, attached, and uses the PV, FV, PMT functions except for two computations that ...

Solution Summary

Your tutorial is in excel, attached, and uses the PV, FV, PMT functions except for two computations that cannot be solved with these. Those two have an amortization schedule or an IRR computation to arrive at the needed amounts. The computations are all done pointing to the data cells and so this is a template for other similar problems. Changes to the data will update the answers. Click in cells to see calculations.

$2.19