Create your own problem for each function listed below.

FUTURE VALUE FUNCTION:

FV $=$ PV $*(1+$i$)^$n

$^$ means to the power of; FV $=$ future value; PV $=$ present value; i $=$ interest; n $=$ number of periods.

You can manipulate the FV formula to compute the PV:

PV $=$ FV$/(1+$i$)^$n

Of course you could also solve for interest $($i$)$ or n $($number of periods$).$

ANNUITY FUNCTION:

PV of Annuity $=$ pmt $((1/$i$)-(1/($i$(1+$i$)^$n$))$

pmt means periodic payment

You can solve problems using your calculator though in this course the expectation is that you will use Excel.

PRESENT VALUE FUNCTION:

$=$pv$($rate$,$nper,pmt$,[$fv$],[$type$])$

Example: What is the PV of $$100$ received $5$ years from now if the interest rate is $3\%?$

$=$pv$($rate$,$nper,pmt$,[$fv$],[$type$])$

$=$pv$(\mathrm{.}03,5,0,100,0)$

$$86\mathrm{.}26$

FUTURE VALUE FUNCTION:

$=$fv$($rate$,$nper,pmt$,[$pv$],[$type$])$

Example: What is the FV of $$50$ six years from now, if the interest rate is $8\%?$

$=$fv$($rate$,$nper,pmt$,[$pv$],[$type$])$

$=$fv$(\mathrm{.}08,6,0,50,0)$

$$79\mathrm{.}34$

NUMBER OF PERIODS FUNCTION:

$=$nper$($rate$,$pmt$,$pv$,[$fv$],[$type$])$

Example: How many periods does it take for $$20$ to increase to $$30,$ if the interest rate is $12\%?$

$=$nper$($rate$,$pmt$,$pv$,[$fv$],[$type$])$

$=$nper$(0\mathrm{.}12,0,20,-30,0)$

$3\mathrm{.}58$ years

Note that the FV and the PV are opposite signs $($inflow and outflow$).$

INTEREST RATE FUNCTION:

$=$rate$($nper$,$pmt$,$pv$,[$fv$],[$type$],[$guess$])$

Example: What interest rate is earned on an investment that grows from $$25$ to $$40$ over $3$ years?

$=$rate$($nper$,$pmt$,$pv$,[$fv$],[$type$],[$guess$])$

$=$rate$(3,0,25,-40,0,0)$

$16\mathrm{.}96\%$

Note the default formatting for the answer is as a percentage. This may not be acceptable; you will need to change the formatting to general so that your answer is not rounded inappropriately.

Note that the FV and the PV are opposite signs $($inflow and outflow$).$ It is generally not necessary to enter a guess.

PAYMENT FUNCTION:

$=$pmt$($rate$,$nper,pv$,[$fv$],[$type$])$

Example: What is the required annual payment that would be required to have $$1,000,000$ in $40$ years, if an investor could earn $12\%$ per year?

$=$pmt$(0\mathrm{.}12,40,0,1000000,0)$

$$1303\mathrm{.}63$