Question 2

Discuss the meaning of this mathematical expression and verify it using EXCEL FV_4/PV_0 =(1+r)^4 i.e. a) Explain what is the meaning of the ratio FV_4/PV_0 b) Explain what is the meaning of the term (1+r) and c) why the term (1+r) it is raised to the forth power i.e. it is multiplied to itself four times. d) Furthermore explain why there is a balance, i.e. the two terms are equal NOTE non WI sections should provide the written explanation in there Excel sheet, while the WI section in the Word document.

Question 3

If you have a deposit of $10,000 for two years with a return rate of three percentage points and another deposit of $9,000 for four years with a return rate of five percentage points. a) calculate the future expected values of these deposits annually, all at once using the Excel Formula and your own formula. b) graph the annual calculations, and c) discuss the situation you face indicating what is happening, what is your preference and why.