) What is the future value at the end of year 13 of a series of deposits that starts at $6,000 in year 1 and shrinks by 7% per year for 13 years (last deposit occurs at the end of year 13)? The annual interest rate is 7% compounded annually.
please answer in excel
Solution(s):
ANSWER:
All the calculations have been done in excel.
i = 7%
YEAR | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 |
CASH FLOWS | 6,000 | 5580 | 5189.4 | 4826.142 | 4488.31206 | 4174.130216 | 3881.941101 | 3610.205224 | 3357.490858 | 3122.466498 | 2903.893843 | 2700.621274 | 2511.577785 | |
FUTURE VALUE | $13,513.15 | $11,745.07 | $10,208.34 | $8,872.67 | $7,711.76 | $6,702.74 | $5,825.75 | $5,063.50 | $4,400.99 | $3,825.16 | $3,324.67 | $2,889.66 | $2,511.58 | |
TOTAL FUTURE VALUE | $86,595.02 |
in excel we calculate future value by using the =-fv function.
=-fv(rate,nper,pmt,pv,type)
the total future value is $86,595.02
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