Time Value of Money: Future Present Value
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For the below time value of money problems, complete using formulas in Excel on each separate tab. Mention any assumptions and support each decision made.
Question One:
You deposited $15,000 today and the interest rate is 8% annually. How much will you have in nine years?
Question Two:
Tiff will receive a graduation gift of $10,000 from her parents in three years. If the discount rate is 7%, what would this present worth today?
Question Three:
What's the present value of a twenty year ordinary annuity of $30,000 using a discount rate of 6%?
Question Four:
You deposited $5,000 in an account paying 8% interest a year. How long will it take to double the amount?
Question Five:
The Johnsons have $60,000 to use as a down payment on a home, and they want to borrow $240,000. The mortgage interest rate is 5%. If they make equal monthly payments for thirty years, how much they be paying each month?
Question Six:
Tim pays $250 a month into his 401K retirement plan. After thirty years, he will have $500,000. What average annual rate of interest will he earned?
Question Seven:
In 2001 Charlotte's firm had sales of $525,000. By 2012, sales went up to $1,200,000. What's the average annual rate of increase?
Question Eight:
Alan had saved up $500,000 so far. How much more must he save per year over the next ten years in order to have a total of $2 million? Alan earns 5% interest, compounded each year.
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Solution Summary
The instructional comments explain how each variable was extracted from the problem, what function in excel is needed and when to use a negative amount in the formula.
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