Question

Use the Excel time value of money functions to complete the following problems. Highlight your answers. Upload your solution on blackboard.

1) Manny’s grandparents gave him $1,800 for his birthday. He opened a savings account that pays 4% annually. How much money will he have in 7 years if he does not make any withdrawals?

N=
I=
PV=
PMT=
FV=

2) Your parents will retire in 25 years. They currently have $100,000 in savings. They think they will need $1,000,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don’t save any additional funds?

N=
I=
PV=
PMT=
FV=

3) If you deposit $75,000 in an account that pays 6% annual interest, how long will it take to double your money?

N=
I=
PV=
PMT=
FV=

4) Roy deposited $850 in an account that pays 6% compounded semiannually. How much money will he have in the account 10 years from now?

N=
I=
PV=
PMT=
FV=

5) Jerry has $450,000 in his savings account. How much money did he deposit in the account 10 years ago if he earned 8% compounded monthly?

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I=
PV=
PMT=
FV=

6) Amanda deposited $40,000 in an account that pays 4% annually. How long will it take her to triple the money if interest is paid every quarter?

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I=
PV=
PMT=
FV=

Answer 1

For 1, use FV () function in excel, please note that when you put PV in the formula, that should be a negative value.

For 2, use RATE () function in excel, please note that when you put FV in the formula, that should be a negative value.

For 3, use NPER () function in excel, please note that when you put FV in the formula, that should be a negative value.

For 4, use FV () function in excel and semi annual rate and semi annual time

For 5, use PV () function in excel and monthly rate and time in months

For 6, use NPER () function in excel and quarterly rate. Time you will get in quarters so divide by 4 to get answer in years

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