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. a. Find the FV of $1,000 invested to earn 10% after 4 years. Round your answer to the nearest cent. s b. What is the investment's FV at rates of 0%,5%, and 25% after 0,1,2,3,4, and 5 years? Round your answers to the nearest cent. b. Creating a table with FVs at various interest rates and time periods using Data Table Creating a graph with years on the horizontal axis and FV on the vertical axis c. Finding PV Future value (FV) Discount rate (I) Number of years (N) Present value (PV) \begin{tabular}{r|l} $1,000 & \\ 10% & \\ 4 & Formulas \end{tabular} d. Finding the rate of return provided by the security Cost of security (PV) \#N/A Future value of security (FV) Number of years (N) Rate of return (I) $1,000$3,0004 \#N/A e. Calculating the number of years required to double the population Current population in millions (PV) Growth rate (I) Doubled population in millions (FV) 36.9 3% Number of years required to double (N) \#N/A \#N/A f. Finding the PV and FV of an ordinary annuity Annuity (PMT) Interest rate (I) Number of years (N) Present value of ordinary annuity (PV) Future value of ordinary annuity (FV) $1,000 13% 4 \#N/A \#N/A . Recalculating the PV and the FV for parts a and c if the interest rate is semiannually compounde Future value (FV) \#N/A Present value (PV) \#N/A j. Finding the PV and the FV of an investment that makes the following end-of-year payments k. Five banks offer the same nominal rate on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. (1) Calculating the effective annual rate for each bank and the future values of the deposit at the end of 1 year and 2 years \begin{tabular}{lr} Nominal rate (hou) \\ Deposit (PV) \\ Number of days per year & 84,500 \\ \hline \end{tabular} \begin{tabular}{l|lllll} & A & B & C & D \\ \hline EAR after 1 year & & & \\ FV atter 2 years & & & \\ \hline \end{tabular} 12) Calculating the nominal rates that will cause all of the banks to provide the same effective annual rate as Bank A 3) Calculating the amount of payment to be made annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E Veeded amount (FV) $4,500 Formulas Number of years (N) EAR FV after 1 year FV after 2 years \begin{tabular}{l|l} & A \\ \hline EAR & HNA \\ FV after 1 year & HNA \\ FV after 2 years & HN/A \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multirow{2}{*}{\multicolumn{5}{|c|}{ Payment (PMT) }} \\ \hline & & & & \\ \hline \multicolumn{5}{|l|}{ Setting up the amortization schedule } \\ \hline Drignal amount of mortgage (PV) & $14,000 & & & \\ \hline nterest rate (0) & 9% & & & \\ \hline Eerm to maturity vears (N) & 4 & & & \\ \hline \end{tabular} Payment (PMT) A AN/A (1) Calculating the effective annual rate for each bank and the future values of the deposit at the end of 1 year and 2 years \begin{tabular}{|c|c|c|c|c|c|} \hline Nominal rate (hicul) & 8% & & & & \\ \hline Deposit (PV) & $4,500 & & & & \\ \hline Number of days per year & 365 & & & & \\ \hline & A & B & C & D & E \\ \hline \begin{tabular}{l} EAR \\ FV after 1 year \\ FV after 2 years \end{tabular} & & & & & \\ \hline \end{tabular} \begin{tabular}{l|l} Formulas & \\ \hline \end{tabular} (2) Calculating the nominal rates that will cause all of the banks to provide the same effective annual rate as Bank A Sheet1 Formula b. What is the investment's FV at rates of 0%,5%, and 25% after 0,1,2,3,4, and 5 years? Round your answers to the nearest cent. Choose the correct graph of future value as a function of time and rate. Note: blue line is for 0%, orange line is for 5%, and grey line is for 25%. The correct graph is c. Find the PV of $1,000 due in 4 years if the discount rate is 10%. Round your answer to the nearest cent. s d. A security has a cost of $1,000 and will return $3,000 after 4 years. What rate of return does the security provide? Round your answer to two decimal places. % e. Suppose California's population is 36.9 million people, and its population is expected to grow by 3% annually. How long will it take for the population to double? Round your answer to the nearest whole number. years f. Find the PV of an ordinary annuity that pays $1,000 each of the next 4 years if the interest rate is 13%. Then find the FV of that same annuity. Round your answers to the nearest cent. PV of ordinary annuity: \$ FV of ordinarv annultv: s f. Find the PV of an ordinary annuity that pays $1,000 each of the next 4 years if the interest rate is 13%. Then find the FV of that same annuity. Round your answers to the nearest cent. PV of ordinary annuity: \$ FV of ordinary annuity: $ 9. How will the PV and FV of the annuity in part f change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent. PV of annuity due: $ FV of annulty due: $ h. What will the FV and the PV for parts a and c be if the interest rate is 10% with semiannual compounding rather than 10% with annual compounding? Round your answers to the nearest cent. FV with semiannual compounding: s PV with semlannual compounding: \$ 1. Find the annual payments for an ordinary annuity and an annulty due for 8 years with a PV of $1,000 and an interest rate of 9%. Round your answers to the nearest cent. Annual payment for ordinary annuity: s Annual payment for annulty due: $ 9. Find the PV and the FV of an investment that makes the following end-of-year payments. The interest rate is 9%. Round your answers to the nearest cent. PV of investment: $ FV of investment: $ Round your answers to the nearest cent. PV of investment: $ FV of investment: $ k. Flve banks offer nominal rates of 8% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays dally. Assume 365 days in a year. 1. What effective annual rate does each bank pay? If you deposit $4,500 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. Autosaved at 11:43 AM 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. 3. Suppose you don't have the $4,500 but need it at the end of 1 year. You plan to make a series of deposits - annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E - with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cent. 4. Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks? It is more likely that an investor would prefer the bank that compounded frequently. 1. Suppose you borrow $14,000. The interest rate is 9%, 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 ". Choose the correct graph that shows how the payments are divided between interest and principal repayment over time. The correct graph is 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. a. Find the FV of $1,000 invested to earn 10% after 4 years. Round your answer to the nearest cent. s b. What is the investment's FV at rates of 0%,5%, and 25% after 0,1,2,3,4, and 5 years? Round your answers to the nearest cent. b. Creating a table with FVs at various interest rates and time periods using Data Table Creating a graph with years on the horizontal axis and FV on the vertical axis c. Finding PV Future value (FV) Discount rate (I) Number of years (N) Present value (PV) \begin{tabular}{r|l} $1,000 & \\ 10% & \\ 4 & Formulas \end{tabular} d. Finding the rate of return provided by the security Cost of security (PV) \#N/A Future value of security (FV) Number of years (N) Rate of return (I) $1,000$3,0004 \#N/A e. Calculating the number of years required to double the population Current population in millions (PV) Growth rate (I) Doubled population in millions (FV) 36.9 3% Number of years required to double (N) \#N/A \#N/A f. Finding the PV and FV of an ordinary annuity Annuity (PMT) Interest rate (I) Number of years (N) Present value of ordinary annuity (PV) Future value of ordinary annuity (FV) $1,000 13% 4 \#N/A \#N/A . Recalculating the PV and the FV for parts a and c if the interest rate is semiannually compounde Future value (FV) \#N/A Present value (PV) \#N/A j. Finding the PV and the FV of an investment that makes the following end-of-year payments k. Five banks offer the same nominal rate on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. (1) Calculating the effective annual rate for each bank and the future values of the deposit at the end of 1 year and 2 years \begin{tabular}{lr} Nominal rate (hou) \\ Deposit (PV) \\ Number of days per year & 84,500 \\ \hline \end{tabular} \begin{tabular}{l|lllll} & A & B & C & D \\ \hline EAR after 1 year & & & \\ FV atter 2 years & & & \\ \hline \end{tabular} 12) Calculating the nominal rates that will cause all of the banks to provide the same effective annual rate as Bank A 3) Calculating the amount of payment to be made annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E Veeded amount (FV) $4,500 Formulas Number of years (N) EAR FV after 1 year FV after 2 years \begin{tabular}{l|l} & A \\ \hline EAR & HNA \\ FV after 1 year & HNA \\ FV after 2 years & HN/A \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multirow{2}{*}{\multicolumn{5}{|c|}{ Payment (PMT) }} \\ \hline & & & & \\ \hline \multicolumn{5}{|l|}{ Setting up the amortization schedule } \\ \hline Drignal amount of mortgage (PV) & $14,000 & & & \\ \hline nterest rate (0) & 9% & & & \\ \hline Eerm to maturity vears (N) & 4 & & & \\ \hline \end{tabular} Payment (PMT) A AN/A (1) Calculating the effective annual rate for each bank and the future values of the deposit at the end of 1 year and 2 years \begin{tabular}{|c|c|c|c|c|c|} \hline Nominal rate (hicul) & 8% & & & & \\ \hline Deposit (PV) & $4,500 & & & & \\ \hline Number of days per year & 365 & & & & \\ \hline & A & B & C & D & E \\ \hline \begin{tabular}{l} EAR \\ FV after 1 year \\ FV after 2 years \end{tabular} & & & & & \\ \hline \end{tabular} \begin{tabular}{l|l} Formulas & \\ \hline \end{tabular} (2) Calculating the nominal rates that will cause all of the banks to provide the same effective annual rate as Bank A Sheet1 Formula b. What is the investment's FV at rates of 0%,5%, and 25% after 0,1,2,3,4, and 5 years? Round your answers to the nearest cent. Choose the correct graph of future value as a function of time and rate. Note: blue line is for 0%, orange line is for 5%, and grey line is for 25%. The correct graph is c. Find the PV of $1,000 due in 4 years if the discount rate is 10%. Round your answer to the nearest cent. s d. A security has a cost of $1,000 and will return $3,000 after 4 years. What rate of return does the security provide? Round your answer to two decimal places. % e. Suppose California's population is 36.9 million people, and its population is expected to grow by 3% annually. How long will it take for the population to double? Round your answer to the nearest whole number. years f. Find the PV of an ordinary annuity that pays $1,000 each of the next 4 years if the interest rate is 13%. Then find the FV of that same annuity. Round your answers to the nearest cent. PV of ordinary annuity: \$ FV of ordinarv annultv: s f. Find the PV of an ordinary annuity that pays $1,000 each of the next 4 years if the interest rate is 13%. Then find the FV of that same annuity. Round your answers to the nearest cent. PV of ordinary annuity: \$ FV of ordinary annuity: $ 9. How will the PV and FV of the annuity in part f change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent. PV of annuity due: $ FV of annulty due: $ h. What will the FV and the PV for parts a and c be if the interest rate is 10% with semiannual compounding rather than 10% with annual compounding? Round your answers to the nearest cent. FV with semiannual compounding: s PV with semlannual compounding: \$ 1. Find the annual payments for an ordinary annuity and an annulty due for 8 years with a PV of $1,000 and an interest rate of 9%. Round your answers to the nearest cent. Annual payment for ordinary annuity: s Annual payment for annulty due: $ 9. Find the PV and the FV of an investment that makes the following end-of-year payments. The interest rate is 9%. Round your answers to the nearest cent. PV of investment: $ FV of investment: $ Round your answers to the nearest cent. PV of investment: $ FV of investment: $ k. Flve banks offer nominal rates of 8% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays dally. Assume 365 days in a year. 1. What effective annual rate does each bank pay? If you deposit $4,500 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. Autosaved at 11:43 AM 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. 3. Suppose you don't have the $4,500 but need it at the end of 1 year. You plan to make a series of deposits - annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E - with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cent. 4. Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks? It is more likely that an investor would prefer the bank that compounded frequently. 1. Suppose you borrow $14,000. The interest rate is 9%, 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 ". Choose the correct graph that shows how the payments are divided between interest and principal repayment over time. The correct graph is