Excel Activity: Time value of money The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Enter your answers as positive values x Download spreadsheet Time value of money Sildabo.xlsx a. Find the IV of $1,000 invested to earn 10% after 6 years. Round your answer to the nearest cent. 5 b. What is the investment's IV at rates of 0.5%, and 30% after 0, 1, 2, 3, 4, and 5 years Round your answers to the nearest cent. Interest Rate 0 Year 0 30% S $ $ 1 5 $ 5 5 5 $ 2 3 $ $ $ 4 5 5 5 5 $ Choose the correct graph of future vers a function of time and rate. Note: blue line for orange lines for and grey lines for 30% The correct graphs 5000 4000 Future Value ($) A. 3000 2000 1000 Year 7000 FV as Function of Time and Rate 6000 5000 34000 Future Value (5) B. 3000 2000 1000 Year 7000 FV as Function of Time and Rate 6000 5000 4000 Future Value($) C. 3000 2000 1000 Year 7000 FV as Function of Time and Rate 6000 5000 4000 Future Value (9) D. 3000 2000 1000 c. Find the PV of $1,000 due in 6 years of the discount rate is 10%. Round your answer to the nearest cent $ d. A security has a cost of $1,000 and will return $3,000 after 6 years. What rate of return does the security provide? Round your answer to two decimal places t. Suppose California's population is 36.4 million people, and its population is expected to grow by 4% annually. How long will it take for the population to double? Round your answer to the nearest whole number years 1. Find the PV of an ordinary annuity that pays $1,000 each of the next years the interest rate 16%. Then find the IV of that same annuity. Round your answers to the nearest cent PV of ordinary annuity: 3 IV of ordinary annuity 9. How will the PV and of the annuity in part I change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent. PV of annuity du: IV of annuity du: h. What will the land the IV for parts and be if the rest rate 10 with semiannual compounding rather than 10% with annual compounding Round your awwers to the nearest cent IV with semiannual compoundings PV with semana compoundings Find the annual payments for an ordinary annuity and an annuity due for 12 years with a PV of $1,000 and an interest rate of 8%. Round your answers to the nearest cent Annual payment for ordinary annuity: 5 Annual payment for annuity due $ 1. Find the PV and the TV of an investment that makes the following end of year payments. The interest rate is 8% Year 1 Payment $200 $400 5600 2 3 Round your answers to the nearest cent. PV of investments FV of investments kive banks offer nominal rates of 6% on deposits, but A pays interest annually, pays semiannually, pays quarterly pays monthly, and I pays daily. Assume 365 days in a year 1. What effective annual rate does each bank pay? If you deposit $6,000 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places 1. What effective annual rate does each bank pay? If you deposit $6,000 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places A B D E 06 90 EAR Valter 1 year IV after 2 years 5 $ $ 5 $ $ $ $ $ $ 2. If the TVM is the only consideration, what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A? Round your answers to two decimal places B C D Nominal rate % 9 3. Suppose you don't have the $6,000 but need it at the end of 1 year. You plan to make a series of deposits annually for a semiannually for quarterly for C, monthly for and daily for with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cont A D Payment $ 5 5 4 Even if the five banks provided the same effective annual rate, would a rational investor be indiferent between the banker? It is more likely that an investor would prefer the bank that compounded frequently 1. Suppose you borrow $15,000. The interest rate is 8%, and it requires 4 equal end of year payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances. Round your answers to the nearest cent. If your answer is zero, entero Suppose you borrow $15,000. The interest rate is 8%, and it requires 4 equal end-of-year payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments and beginning and ending loan balances. Round your answers to the nearest cent. If your answer is zero, enter"0" Beginning Balance Year Payment Interest Repayment of Principal Ending Balance 1 $ 5 5 $ $ 2 5 5 5 S 5 5 5 $ 5 5 4 $ $ $ Choose the correct graph that shows how the payments are divided between interest and principal repayment over time. The correct graphs 3000 3000 Dollar Value Dollar Value B 2000- 11 2000 1000- 1000- 1 Year Year Repayment of Principal (5) Interest (6) Repayment of Principal (5) Interest (5) 6000 Breakdown of payments Breakdown of payments 6000 5000 5000 4000- 4000 3000 Dolar Values 3000 Dollar Values C D 2000- 2000 1000 1000+
