Question

Time Value of Money

Complete the following exercise using MS Excel. Using the Present Value and Future Value Equations

4. If you invested $200 at 5%, how much would it be worth in 30 years?

5. How many years does it take to double your money if it is invested at 6%?

6. If you invest $10,000 in a 20 year annuity paying 5%, what would be the annual payment made to you?

7. If you have a student loan balance of $10,000, with an interest rate of 3%, what is the annual payment if the term is 6 years?

8. How much interest will you pay on the student loan in the previous exercise?

9. If I save $100 per year for 30 years, earning 3%, how much will I have at the end of 30 years?

10. If the interest rate in the previous exercise is 5%, how long will it take to accumulate the same amount?

11. How much interest was accumulated in each of the previous two exercises

Answer 1

Answers:-

4. If you have invested $200 at 5%, then after 30 Year it be worth for $864.

5. 12 years will take to double your mondy if it is invested at 6%.

6. If you have Invest $10,000 in a 20 year annuity paying 5%, then $ 802.43 will be annual payment made to you. and Total interest earned amount will be $6048.52

7 Total $1824.00 will be annual payment if the term is for 6 Years.

8. Total $939 need to pay as interest on student loan in previous exercise.

9. Total $4,900 will have at the end of 30 Years if save $100 per year for 30 Years, earning 3%.

10. In 25 years it will take to accumulate the same amount if interest rate in the previous exercise is 5%.

11. $1900 interest accumulated if interest rate is 3% and $ 2511 interest accumulated if interest rate is 5% in previous excercise.

EXERCISE FOR QUISTION-4
Year	Investment	Interest Rate	Earned Interest	Maturity Amount
Year-1	$             200	5%	$          10	$        210
Year-2	$                  -	5%	$          11	$        221
Year-3	$                  -	5%	$          11	$        232
Year-4	$                  -	5%	$          12	$        243
Year-5	$                  -	5%	$          12	$        255
Year-6	$                  -	5%	$          13	$        268
Year-7	$                  -	5%	$          13	$        281
Year-8	$                  -	5%	$          14	$        295
Year-9	$                  -	5%	$          15	$        310
Year-10	$                  -	5%	$          16	$        326
Year-11	$                  -	5%	$          16	$        342
Year-12	$                  -	5%	$          17	$        359
Year-13	$                  -	5%	$          18	$        377
Year-14	$                  -	5%	$          19	$        396
Year-15	$                  -	5%	$          20	$        416
Year-16	$                  -	5%	$          21	$        437
Year-17	$                  -	5%	$          22	$        458
Year-18	$                  -	5%	$          23	$        481
Year-19	$                  -	5%	$          24	$        505
Year-20	$                  -	5%	$          25	$        531
Year-21	$                  -	5%	$          27	$        557
Year-22	$                  -	5%	$          28	$        585
Year-23	$                  -	5%	$          29	$        614
Year-24	$                  -	5%	$          31	$        645
Year-25	$                  -	5%	$          32	$        677
Year-26	$                  -	5%	$          34	$        711
Year-27	$                  -	5%	$          36	$        747
Year-28	$                  -	5%	$          37	$        784
Year-29	$                  -	5%	$          39	$        823
Year-30	$                  -	5%	$          41	$        864

EXERCISE FOR QUISTION-5
Year	Investment	Interest Rate	Earned Interest	Maturity Amount
Year-1	$     200	6%	$          12	$        212
Year-2	$          -	6%	$          13	$        225
Year-3	$          -	6%	$          13	$        238
Year-4	$          -	6%	$          14	$        252
Year-5	$          -	6%	$          15	$        268
Year-6	$          -	6%	$          16	$        284
Year-7	$          -	6%	$          17	$        301
Year-8	$          -	6%	$          18	$        319
Year-9	$          -	6%	$          19	$        338
Year-10	$          -	6%	$          20	$        358
Year-11	$          -	6%	$          21	$        380
Year-12	$          -	6%	$          23	$        402

EXERCISE FOR QUISTION-6
Year	Beginning Balance	Interest Earned In the Period	Ending Balance
Year-1	$ 10,000	$        500	$    9,698
Year-2	$    9,698	$        485	$    9,380
Year-3	$    9,380	$        469	$    9,047
Year-4	$    9,047	$        452	$    8,697
Year-5	$    8,697	$        435	$    8,329
Year-6	$    8,329	$        416	$    7,943
Year-7	$    7,943	$        397	$    7,538
Year-8	$    7,538	$        377	$    7,112
Year-9	$    7,112	$        356	$    6,665
Year-10	$    6,665	$        333	$    6,196
Year-11	$    6,196	$        310	$    5,704
Year-12	$    5,704	$        285	$    5,186
Year-13	$    5,186	$        259	$    4,643
Year-14	$    4,643	$        232	$    4,073
Year-15	$    4,073	$        204	$    3,474
Year-16	$    3,474	$        174	$    2,845
Year-17	$    2,845	$        142	$    2,185
Year-18	$    2,185	$        109	$    1,492
Year-19	$    1,492	$          75	$        764
Year-20	$        764	$          38	$             -