Question

Biswaroop wants to take a year long vacation in Thailand. He figures he can live on 33600 bhat per month. (1 Canadian dollar = 39 Thai bhat (rougly)). He plans to withdraw that amount at the start of each month from his Thai savings account paying 3% interest compounded monthly. a) How much money (in Thai bhat) will he need in his Thai account at the start of his vacation? In order to save up the necessary amount of money, Biswaroop will deposit money at the end of each month for 2 years in a Canadian savings account paying 4% per year compounded monthly. His first deposit will be $P and then each subsequent deposit will increase by $P. b) How much does he need in Canadian dollars so that when he transfers it to his Thai account he has enough bhat for the year? c) What is the PV of an annuity due paying $1 (Canadian) per month for 12 months? d) How big does $P have to be so that he ends up with enough Canadian dollars in his account to start his vacation?

Answer 1

a. Amount required in Thai Bhats:

Formulas:

In Thailand (Thai Bath)
Monthly requirement	33600
Period in months	12
Interest rate per year	0.03
Amount at the start of travel	=PV(B4/12,B3-1,-B2)+B2

b.

Formulas:

Convertion rate in Bhat/Dollar	39
In Canada pre travel (Dollar)
Amount at the start of travel	=B5/B7

c.

Formulas:

Deposit	1
Interest rate yearly	0.04
Preriod in months	12
Present Value	=PV(B21/12,B22,-B20)

d.

Formulas:

In Canada pre travel (Dollar)

Amount at the start of travel

=B5/B7

Period in months

24

Interest rate per year

0.04

Initial deposit, P

=B17

Subsequent deposit increase, P

=B17

Period

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Total

Amount

33.1303599773223

=B17+$B$14

=C17+$B$14

=D17+$B$14

=E17+$B$14

=F17+$B$14

=G17+$B$14

=H17+$B$14

=I17+$B$14

=J17+$B$14

=K17+$B$14

=L17+$B$14

=M17+$B$14

=N17+$B$14

=O17+$B$14

=P17+$B$14

=Q17+$B$14

=R17+$B$14

=S17+$B$14

=T17+$B$14

=U17+$B$14

=V17+$B$14

=W17+$B$14

=X17+$B$14

FV of each deposit

=B17*(1+$B$12/12)^(24-B16)

=C17*(1+$B$12/12)^(24-C16)

=D17*(1+$B$12/12)^(24-D16)

=E17*(1+$B$12/12)^(24-E16)

=F17*(1+$B$12/12)^(24-F16)

=G17*(1+$B$12/12)^(24-G16)

=H17*(1+$B$12/12)^(24-H16)

=I17*(1+$B$12/12)^(24-I16)

=J17*(1+$B$12/12)^(24-J16)

=K17*(1+$B$12/12)^(24-K16)

=L17*(1+$B$12/12)^(24-L16)

=M17*(1+$B$12/12)^(24-M16)

=N17*(1+$B$12/12)^(24-N16)

=O17*(1+$B$12/12)^(24-O16)

=P17*(1+$B$12/12)^(24-P16)

=Q17*(1+$B$12/12)^(24-Q16)

=R17*(1+$B$12/12)^(24-R16)

=S17*(1+$B$12/12)^(24-S16)

=T17*(1+$B$12/12)^(24-T16)

=U17*(1+$B$12/12)^(24-U16)

=V17*(1+$B$12/12)^(24-V16)

=W17*(1+$B$12/12)^(24-W16)

=X17*(1+$B$12/12)^(24-X16)

=Y17*(1+$B$12/12)^(24-Y16)

=SUM(B18:Y18)