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f1.docPRINCIPLES OF FINANCIAL ANALYSIS
SPREADSHEET ASSIGNMENT: Future Value, Rate of Return, Present Value
1. Retrieve the file BUFFETTP.XLS. The book value per share of
Berkshire Hathaway Inc. was $19.46 in 1964, as noted in cell
A6. Column D reports the annual growth rate in book value for
the next 51 years.
2. Calculate the book value per share for each year from 1965
through 2015. For example, the computed value in cell E6
equals the original value reported in cell A6 plus the calendar
year growth rate in book value appearing in cell D6. The value
in cell E7 is equal to the computed value in cell E6 plus the
annual growth rate in cell D7. Use the copy command to compute
values for cells E7:E56.
3. Apply the =RATE financial function command in cell F58 to
compute the average annual growth rate in book value per share
from the starting value in cell A6 through the ending value in
cell E56. In applying this command, enter 51 for the total
number of years, zero for PMT and TYPE, and enter a GUESS of
15% or higher.
4. In cell F59 compute the total percentage rate of growth in
book value per share from 1964 to 2015. [Hint: This value is
very large, reflecting Berkshire Hathaway's remarkable record
of owning and investing in companies.]
5. Assume that an investor's proportionate share in Berkshire's
book value was $1,000 at yearend 1964. Apply the =FV financial
function command in cell F60 to calculate the book value
exactly 51 years later. Enter the value computed in cell F58
for RATE. [Hint: The compounded value in cell F58 is very
large.]
6. Apply the =PV financial function command in cell F61 to verify
that the value in cell E56, discounted for 51 years at the
annual rate reported in cell F58, equals the book value per
share in 1964.
7. Print the worksheet.
Grade Value: 15 points
Submission date:
NO LATE ASSIGNMENTS WILL BE ACCEPTED.
