Question

(Note: These problems are based on the textbook for 301A/B: Kieso/Weygandt/Warfield, Immediate Accounting, 15ed., Chapter 6 "Accounting and Time Value of Money") All problem is independent of each other. 1. What is the future value of 20 periodic payments of $4,000 each made at the beginning of each period and compounded at 8%?

Build an Excel worksheet to verify your calculation of #1. Show the calculation year by year (periodic amount, payment, balances etc.)

Answer 1

• All working forms part of the answer
• Total Amount deposited = $4000 x 20 = $80,000
• Calculation of Amount at the end of year of 20^th deposit

Beginning Investment Balance [A]	Periodic Payment no.	Amount deposited [B]	Interest earned at 8% [C=(A+B)x8%]	Ending Investment Balance [A+B+C]
$                                 -	1	$              4,000.00	$                 320.00	$            4,320.00
$                    4,320.00	2	$              4,000.00	$                 665.60	$            8,985.60
$                    8,985.60	3	$              4,000.00	$             1,038.85	$         14,024.45
$                  14,024.45	4	$              4,000.00	$             1,441.96	$         19,466.40
$                  19,466.40	5	$              4,000.00	$             1,877.31	$         25,343.72
$                  25,343.72	6	$              4,000.00	$             2,347.50	$         31,691.21
$                  31,691.21	7	$              4,000.00	$             2,855.30	$         38,546.51
$                  38,546.51	8	$              4,000.00	$             3,403.72	$         45,950.23
$                  45,950.23	9	$              4,000.00	$             3,996.02	$         53,946.25
$                 53,946.25	10	$              4,000.00	$             4,635.70	$         62,581.95
$                  62,581.95	11	$              4,000.00	$             5,326.56	$         71,908.51
$                  71,908.51	12	$              4,000.00	$             6,072.68	$         81,981.19
$                  81,981.19	13	$              4,000.00	$             6,878.49	$         92,859.68
$                  92,859.68	14	$             4,000.00	$             7,748.77	$      1,04,608.46
$              1,04,608.46	15	$              4,000.00	$             8,688.68	$      1,17,297.13
$              1,17,297.13	16	$              4,000.00	$             9,703.77	$      1,31,000.90
$              1,31,000.90	17	$              4,000.00	$           10,800.07	$      1,45,800.97
$              1,45,800.97	18	$              4,000.00	$           11,984.08	$      1,61,785.05
$              1,61,785.05	19	$              4,000.00	$           13,262.80	$      1,79,047.86
$              1,79,047.86	20	$              4,000.00	$           14,643.83	$      1,97,691.69 or $197,672

• At the end of 20 annual deposit, the final amount will be equal to $197,672