Question

Please show the work in excel be sure to use appropriate formulas to solve each exercise or problem.

A1 If you deposit $12,000 in a bank account that pays 10% interest annually, how much will be in your account after 7 years?

A2.    What is the present value of a security that will pay $10,000 in 20 years at an interest rate of 8%?

A3.                 Find the future value of the following ordinary annuities:

$600 per year for 10 years at 10%

$300 per year for 5 years at 5%

$600 per year for 5 years at 0%

    A 4 Find the present value of the following ordinary annuities:

$600 per year for 10 years at 10%

$300 per year for 5 years at 5%

$600 per year for 5 years at 0%

Answer 1

A1)Future Value of Deposit = Deposit*(1 + r)^n = 12,000 x (1 + 10%)^7 = $23,384.60

N=No of periods

R= rate of interest per period

A2)Present Value of Security= Future value / (1 + r)^n = 10,000 / (1 + 8%)^20 = $2,145.48

A3) Future Value of Ordinary Annuity

Formula Amount=P(1+r)ⁿ-1 / r

a. N = 10, PMT = 600, r = 10%, PV =

Future Value =600(1+.10)¹⁰-1/0.1= $9,562.45

b. N = 5, PMT = 300, r = 5%, Future Value =300(1+.05)^5-1/0.05= $1,657.69

c. N = 5, PMT = 600, r = 0%, Future Value =600*5= $3,000.00

A4) Present Value of ordinary Annuity

a. N = 10, PMT = 600, r = 10%,Present Value=600*6.14456 = $3,686.74

b. N = 5, PMT = 300, r = 5%, Present Value=300*4.32947= $1298.84

c. N = 5, PMT = 600, r= 0%, Present Value=600*5= $3,000.00