Time value

FIN419r6wk2TimeValueofMoneyTemplate.xlsx

Instructions

1. You have five problems - one on each tab of this Excel file.

2. Please show your work in the cells. Use Excel formulas instead of writing the values/answers directly in the cell (required).

The instructor will then know where you made a mistake and provide you valuable feedback and partial credit (if appropriate).

Total Points: 80

If we place $7,564 in a savings account paying 7.5 percent interest compounded annually, how much will our account accrue to in 8.5 years?
FV = PV × (1 + i)n
Present Value (PV)	7,564
Interest Rate (i)	0.075
Number of years (n)	8.5
Answer -

What is the present value of $992 to be received in 13.5 years from today if our discount rate is 3.5 percent?
Future Value (FV)	992
Interest Rate (i)	0.035
Number of years (n)	13.5
Answer -

If you bought a stock for $45 dollars and could sell it fifteen years later for three times what you originally paid. What was your return on owning this stock?
Future Value (FV)	135
Present Value (PV)	45
Number of years (n)	15
Answer -

Suppose you bought a house for $3,250,000 to make it a nursing home in the future. But you have not committed to the project and will decide in nine years whether to go forward with it or sell off the house.
If real estate values increase annually at 1.5%, how much can you expect to sell the house for in nine years if it chooses not to proceed with the nursing home project?
FV = PV × (1 + i)n
Present Value (PV)	3,250,000
Interest Rate (i)	0.015
Number of years (n)	9
Answer -

If your daughter wants to earn $219,000 within the next 24 years and the salaries grow at 4.45% per year. What salary should she start to reach her goal?
Future Value (FV)		219,000
Interest Rate (i)		0.0445
Number of years (n)		24
Answer-