File Edit Insert Table Organize Format Arrange View Share Window Help Class Activity.01(1) 125% . -T Zoom Add Category Insert Table Chart Text Shape Section 1 Review Examples Section 2 Problems Media Comment G D E F H J O A B 3 1- Farm land in Latah county has been selling for $49,900 per hectare. 4 5 a. If it is expected to increase in value at a compound rate of 3% per year, what will be its value in 25 years? 6 VO 7 8 9 $49,900.00 3% 25 $104,479.52 n FV ? 10 11 12 13 14 b. What would the value be if there were 6 compounding periods every year? (see review example 5 in case you need some help) 15 16 FV (125) IN Compounding Periods 18 19 20 PV (Vol 23 22 Alternative using the PV or FV functions in excel 25 VN N Compounding periods (m) 29 To use PV in excel you would need to convert the interest rates and the N to reflect the compounding periods 30 n-256 i per periode 3/6 17 16 Then use prejemt vale Ted These presente tv MacBook Air 80 F2 DIL 74 FS FB 1 2 # 3 $ 4 % 5 6 7 8 9 W E D . bers File Edit Insert Table Organize Format Arrange View Share Window Help Class Activity 01/1) 125% .T View Add Category Insert Table Chart Text Shape + Section 1 Review_Examples Section 2 Problems Media Comment 20 1 H J G D E F A 35 38 37 38 39 2- When you retire, you want to have a million dollars saved. If you plan to retire in 40 years, and you can receive 7% interest annually on an investment account. 40 a. What is the fired amount you have to save each year? 41 42 43 45 b. If interest were compounded monthly, and you would like to save each month instead, what is the monthly fixed amount you have to save? 48 50 51 52 53 55 57 3. John's father ohnny is turning 67 coming month. Johnny retires but wants to do chores for other farmers. He expects an income of $4,000, 56,000, 57.500, and $5,500 at the end of year 1, 2, 3 and 4 respectively. Calculate the present value of his income assuming an interest rate of 12% 57 60 82 65 4. John's grandmother wants to donate the maximum taxfree donation to each of her grandchildren. The first two years Then we present value 3 ty MacBook Air OSC * FT 80 F DU F FS FA 59 A * 1 # 3 2 $ 4 5 6 & 7 8 W E R T Y U Arrang Numbers File Edit Insert Table Organize Format Class Activity 01/1) ul 125 View Zoom Add Category Chart Text Shape Media Comment + Section 1 Review Examples Section 2 Problems A 3 D H 4. John's grandmother wants to donate the maximum tax free donation to each of her grandchildren. The first two years 69 she manages to donate $2,500. Governmental policy is expected to change after two years and it allows her to donate a 70 new maximum of $5,000 (for two more years). What is the future value of the entire donation for each of her 71 grandchildren 15 years from now? Assume an interest rate of 3%. All the donations are at the end of the year. 72 73 75 76 75 80 5- Elise won the competition "The most sustainable farmer'. Her prize is a $2,000 annual payment for the rest of his life. Calculate the present value of this prize, assuming that Elise is immortal and has a 0.8% discount rate 33 14 5 30 6- Elise's brother works in a supermarket and is able to save $3,000 $3,600, and $4,200 after 1, 2 and 3 years respectively Calculate the future value of his savings. Assume an interest rate of 2.4% 90 91 92 7. John's brother finished his high school and starts studying at University of Idaho. He decides that he needs a loan of $3,600 per year for the next five years to cover his expenses. What is the future value of this loan? Assume an interest rate of 1.1% 100 Then use present value aty MacBook Air esc 30 888 TI DU F F A 1 w # 2 $ 4 8 & 7 6 8 Q W E R T T Y U Media Co ol Insert Table Chart Text Add Category Shape Zoom Section 1 Review Examples Section 2 Problems 0 D E H O 104 8-John and his wife have a farm that earns a net income of $45,000 a year. If they assume that their net income will have a 105 constant growth rate of 5%, and their discount rate is 9% 106 107 a. Calculate the new discount rate in) 108 100 110 111 b. What is the present value of income earned over the next six years? 112 113 114 115 115 117 718 119 120 9. Upon graduation and employment, you wish to purchase a new car with financing from a financial institution. You will need a loan of $35,000 repayable in 48 monthly payments at an annual interest rate of 8%. Determine the level of the 123 monthly payments, and set up a mortgage table in which you determine the repayments of principal and interest 720 122 125 129 130 10- You are leasing equipment from a retired farmer. The equipment is currently worth $300,000 and will be worth 131 $150,000 in 2 years when the lease is over 133 a. What should monthly payments bef8% Interest is desired? 134 35 737 138 b. What if Interest rate is ON? The use present MacBook Air esc 80 F 898 F! bu F6 FS 56 @ ! 1 A 2 # 3 $ 4 % 5 6 & 7 8 tab W E R IT