The Financial group of functions in Excel contains the present value (PV) function as well as a function to help you find a required payment amount (PMT). In all cases, enter the dollar amount as a negative number so that you will not get a negative result.

Finding the present value of a single sum: Select the PV function and enter the appropriate discount rate (rate), and the number of periods (nper); enter the amount you are discounting back to its present value as the future value (fv)do not enter anything in the payment area.

Finding the present value of an ordinary annuity (rents occur at end of period): Select the PV function and enter the appropriate discount rate (rate), and the number of periods (nper); enter the amount of the annuity per period in the payment area (pmt)do not enter anything in the future value area. You may leave the Type area blank or enter zero in this area.

Finding the present value of an annuity due (rents occur at the beginning of each period): Select the PV function and enter the appropriate discount rate (rate), and the number of periods (nper); enter the amount of the annuity per period in the payment area (pmt)do not enter anything in the future value area. Enter a 1 in the Type area.

Finding the required payment: Select the PMT function and enter the appropriate interest rate (rate), and the number of periods (nper); enter the amount to which you wish to add interest as the present value (pv) or future value(fv) as appropriate. You may leave the "Type" area blank unless you are working with an annuity due situation.

REQUIRED:

Solve the following time value of money problems by using the functions described aboveyour formulas should be entered in the designated boxes on the template and should incorporate cell references only (do not modify the template):

1. Largo Freight Lines plans to build a new garage in three years to have more space for repairing its trucks. The garage will cost $400,000. What amount should the company invest now in order to have the $400,000 available at the end of three years if the company can earn 8% on its money? If the company can earn 12% on its money?

2. Martell Products, Inc. can purchase a new copier that will save $5,000 per year in copying costs. The copier will last 6 years and have no salvage value at the end of that time. What is the maximum price Martell should be willing to pay for the copier if the companys required rate of return is 10%? If the companys required rate of return is 16%?

3. Sally has just won the million-dollar Big Slam jackpot at a gambling casino. The casino will pay her $50,000 per year at the end of each of the next 20 years as the payoff. If Sally can earn a 10% rate of return on invested money, what is the present value of her winnings? If the first payment was made today and the remaining 19 payments occurred at the beginning of each of the next 19 year, what is the present value of her winnings?

4. Emily wishes to purchase a new car. The car will cost $35,000 and her credit union will finance the car at 6% for 5 years. Calculate Emily's monthly payment on the loan.

1 COST NUMBER OF PERIODS AT 400000 3 5% AT 12% 2 ANNUAL SAVINGS 5000 10% 16% NUMBER OF PERIODS AT AT 3 ANNUAL PAYMENTS NUMBER OF PERIODS AT 50000 20 10% IF PAYMENTS AT BEGINNING OF EACH YEAR? 4 COST 35000 NUMBER OF PERIODS AT