Question

Please note- we can not use the table. All answers need to be calculated in Excel....

Please note- we can not use the table. All answers need to be calculated in Excel.

Fraser Company will need a new warehouse in eight years. The warehouse will cost $430,000 to build.

Use Excel or a financial calculator to solve. Round answers to the nearest dollar.
Required:
1.

What lump-sum amount should the company invest now to have the $430,000 available at the end of the eight-year period? Assume that the company can invest money at four percent.

      

2.

What lump-sum amount should the company invest now to have the $430,000 available at the end of the eight-year period? Assume that the company can invest money at eight percent.

      

Business   Accounting   
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Homework Answers

Answer #1
Interest Rate (rate) Term in years (nper) Payment (pmt) Future Value (fv) Present Value Formula
4% 8 430000 314196.79 =PV(4%,8,,430000,0)
8% 8 430000 232315.62 =PV(8%,8,,430000,0)
W.N
The PV function in Excel is as follows:
=PV(rate,nper,pmt,[fv],[type])
Note: When the PV function is used with the fv argument instead of the pmt argument,the pmt argument in the function is indicated with a comma
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