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Problem #1: Suppose that you are planning to buy a boat in 16 years [to be entered into cell B2] for an amount of $100,000
Problem #1: Suppose that you are planning to buy a boat in 16 years [to be entered into cell B2] for an amount of $100,000 [cell Bl] at that time, and you earn an average annually compounding rate of return of 2% per year [to be entered into cell B3]. A B $100,000 1 Future value 2 Years 3 Annual rate 4 5 Present value 6 (a) How much money would you need to invest today as a lump sum to achieve your goal [cell B5]? There are no additional deposits or payments. Use the PV function. (b) What is the correct formula (using 16 characters or less) that should be placed in cell B5? Note: There are to be NO numbers in the function call (apart from a 0 if appropriate), only cell references, or negative cell references where appropriate. Additional Note: For some reason, in the PV function, the f.v. represents an amount that is being paid out, not received. So the present value of something being paid out is a negative number. The correct answer to this question is the use of the PV function that returns the correct positive value. Problem #1(a): Answer correct to 2 decimals Problem #1(b)
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