Question

Please provide a real-life example of what you learned. It can be a present value, future value, number of periods, interest rate (growth rate), or payment problem. You need to state the problem and then solve the problem. The problem has to come from our daily life as a student

Answer 1

A real life example that incorporates what i learnt is when I had to take a vacation with my family to my relatives in a foreign country (you can add up a country of your choice). We are a family of four with my mother, father and a litlle sister. We figured the total expenses adjusting for inflation in 12 months would be $15,000. This can be treated as future value. We had no funds set aside for the vacation so present value was zero. The monthly compunded rate in bank deposit was 4% annually. So my parents decide to set aside a mount every month for the same. Now they needed to calculate how much do they have to contribute each month.

Hence this concept came in handy:
n=12
rate= 4/12=0.33%=0.0033
PV=0
FV=15,000

Using excel formula: =PMT(0.0033,12,0,-15000)We get monthly payment as $1,227.47


CPT payment from excel