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Using Excel: Mutual Fund

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Excel Mutual Fund

Your mutual fund grows from $1200 to $1500 in 1 year.

a.) What is the annual growth rate (format as % to zero decimal places)? Growth factor (format as number 2 decimal places)?
b.) Create a table of values expressing the amount in your fund through year 10 assuming this constant growth rate using the idea of a "recursive formula" from the chapter.
c.) Graph this table from part b as a scatterplot and insert exponential trendline with equation.
d.) What is the continuous growth rate? Type in as a decimal to 4 places and a percentage to 2 decimal places.
e.) Given the input cell for years, create an output cell for the value of your mutual fund using the initial value and annual growth factor from part a. Format as currency.
f.) Interpret the annual growth rate from part a by filling in the following sentence.
The ___i____ is changing by ____ii_____ per __iii___.
g.) Given the input cell for years, create an output cell for the value of your mutual fund using the initial value and continuous growth rate from part d. Format as currency. Note: To raise e to a power use the EXP function.
h.) Interpret the continuous growth rate by filling in the following sentence.
The ___i____ is changing continuously by ____ii_____ per __iii___.

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All solutions, computations and formulas are available in the Excel file.

Solution provided by:
J Pye, MSc
Education
  • MSc, California State Polytechnic University, Pomona
  • MBA, University of California, Riverside
  • BSc, California State Polytechnic University, Pomona
  • BSc, California State Polytechnic University, Pomona
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