HOMEWORK #8

Due November 20, 5:00 pm

10 points

Instructions: Using Financial Formulas in Excel, answer the following problems in a single Excel worksheet. Round to the nearest dollar. You must turn in an Excel document.

HOMEWORK #8 Due November 20, 5:00 pm 10 points Instructions: Using Financial Formulas in Excel, answer the following problems in a single Excel worksheet. Round to the nearest dollar. You must turn in an Excel document. 1. What is the balance in an account at the end of 8 years if $7,800 is deposited today and the account earns 1.5% interest compounded annually? 2. How much interest is earned in an account by the end of 6 years if $31,000 is deposited at the beginning of year 1 and interest is 3.2% per year, compounded semi-annually? 3. If you wish to accumulate $40,000 in 6 years, how much must you deposit today in an account that pays annual interest rate of 4%, with quarterly compounding of interest? 4. If you deposit $6,000 per year for 3 years in an account that pays an annual interest rate of 2%, what will your account be worth at the end of 3 years? 5. You decide that you need $50,000 in 5 years to make a down payment on a house. You plan to make annual fixed deposits to achieve your goal. If the interest rate is 3%, how much should be deposited each time? Hint use the Financial Function PMT to solve for the payment and PV will be zero. 6. You owe $19,000 to your parents. You promise to make 4 annual payments of $5,000 to settle your debt. What interest rate are your parents charging (estimated up to 2 decimal places), if you make the 4 annual payments beginning one year from now? Hint use the Financial Function "RATE. Note if you need help use the "Help on this function" feature. This help will include an example for you to follow. 7. You are offered an investment that will pay $11,000 per year for 20 years. If you feel that the appropriate discount rate is 5%, what is the investment worth to you today? 8. Your grandparents offered you some money via the following options. Assuming an annual interest rate of 5%, which option should you choose? Show your work. a. Receive $11,000 immediately b. Receive $2,000 at the end of each six months for three years. This results in payments totaling $12,000. You will receive the first check in six months c. Receive $1,000 at the end of each year for three years, and then $10,000 at the end of the fourth year. This results in payments totaling $13,000 HOMEWORK #8 Due November 20, 5:00 pm 10 points Instructions: Using Financial Formulas in Excel, answer the following problems in a single Excel worksheet. Round to the nearest dollar. You must turn in an Excel document. 1. What is the balance in an account at the end of 8 years if $7,800 is deposited today and the account earns 1.5% interest compounded annually? 2. How much interest is earned in an account by the end of 6 years if $31,000 is deposited at the beginning of year 1 and interest is 3.2% per year, compounded semi-annually? 3. If you wish to accumulate $40,000 in 6 years, how much must you deposit today in an account that pays annual interest rate of 4%, with quarterly compounding of interest? 4. If you deposit $6,000 per year for 3 years in an account that pays an annual interest rate of 2%, what will your account be worth at the end of 3 years? 5. You decide that you need $50,000 in 5 years to make a down payment on a house. You plan to make annual fixed deposits to achieve your goal. If the interest rate is 3%, how much should be deposited each time? Hint use the Financial Function PMT to solve for the payment and PV will be zero. 6. You owe $19,000 to your parents. You promise to make 4 annual payments of $5,000 to settle your debt. What interest rate are your parents charging (estimated up to 2 decimal places), if you make the 4 annual payments beginning one year from now? Hint use the Financial Function "RATE. Note if you need help use the "Help on this function" feature. This help will include an example for you to follow. 7. You are offered an investment that will pay $11,000 per year for 20 years. If you feel that the appropriate discount rate is 5%, what is the investment worth to you today? 8. Your grandparents offered you some money via the following options. Assuming an annual interest rate of 5%, which option should you choose? Show your work. a. Receive $11,000 immediately b. Receive $2,000 at the end of each six months for three years. This results in payments totaling $12,000. You will receive the first check in six months c. Receive $1,000 at the end of each year for three years, and then $10,000 at the end of the fourth year. This results in payments totaling $13,000