Haniyyah Hasna

FMBA Class of 2024

Q1. (15) On your 1st birthday, you received a $10 savings account earning 6% annually. How much will
you have in the account on your 30th birthday if you don't withdraw any money before then? Please show
your work (show/describe how you arrived at the answer).
Answer.
Using Excel with FV formula, submitting the initial investment [pv] at $10, rate at 6%, nper of 30 years,
without withdrawing anything, you will get final value of $ 57.43, as your final balance.
Initial savings $ 10.00
Annual interest rate 6%
Period (yrs) 30
Final savings $ 57.43

Q2. (15) Ten years ago, an account was opened with an investment of $2,000. The ending balance in the
account now is $3,500. If interest was compounded annually, what rate was earned on the account per
year? Please show your work.
Answer.
Using Excel with RATE formula, submitting the initial investment [pv] at $2,000, final balance [fv] at
$3,500, nper of 10 years, you will get rate at 5.76%.
Initial savings $ 2,000
Final savings $ 3,500
Period (yrs) 10
Rate 5.76%

Q3. (15) Your grandma has put $25,000 into a trust account on your behalf, but stipulated that you cannot
withdraw the money until the balance has doubled. How long will you have to leave the money in the
account if it earns 6% a year. Please show your work.
Answer.
Using Excel with NPER formula, submitting rate at 6%, initial investment [pv] at $25,000, target
investment [fv] at $-50,000, you will get the target value after 12 years (11.9).
Initial savings $ 25,000
Final savings $ 50,000
Rate 6%
Period (yrs) 11.90
 Haniyyah Hasna
FMBA Class of 2024
Assignment 1

Q4. (15) Suppose your goal is to retire in 20 years from now with $10 million. How much should you
invest per month, if your invested funds can earn 8% APR (with monthly compounding) in order to
achieve the goal? Show your work.
Answer.
With APR 8% compounding monthly, we got monthly interest at 0.67%. Using Excel PMT formula, set
target investment [fv] at $10,000,000 and period is 240 months (20 years), we can pay monthly at
$16,977.
APR 8%
Compounding Monthly
Interest monthly 0.667%
Target investment $ 10,000,000
Period (monthly) 240
PMT (monthly) $ 16,977.34

Q5. (20) Suppose that you have just retired at the age of 65 with a retirement account that has the net
asset value of $10 million. Assuming that you will live until the age of 100 (35 years more!), how much
can you afford to withdraw from your retirement account per month? Assume that your retirement
account continues to earn 8% APR (with monthly compounding) on its remaining balances.
Answer.
Same as Q4, with APR 8% compounding monthly, we got monthly interest at 0.67%, present value [pv]
at $10,000,000 and period is 420 months (35 years), we can withdraw money monthly at $71,026.
APR 8%
Compounding Monthly
Interest monthly 0.667%
PV $ 10,000,000
Period (monthly) 420
PMT (monthly) $ 71,026.09
 Haniyyah Hasna
FMBA Class of 2024
Assignment 1

Q6. (20) Suppose that you are taking out a fixed-rate amortizing loan and assume the following:
• Loan Principal: $100,000
• Interest Rate: 5% APR
• Terms: 5 years
Month Payment Interest Principle Remaining
• Interests are accrued
0 monthly on the remaining unpaid principal. $ 100,000.00
1 $ 1,887.12 $ 416.67 $ 1,470.46 $ 98,529.54
2 $ payment?
A. What is your monthly 1,887.12 $ show your
Please 410.54
work.$ 1,476.58 $ 97,052.96
3 $ 1,887.12 $ 404.39 $ 1,482.74 $ 95,570.22
Answer. 4 $ 1,887.12 $ 398.21 $ 1,488.91 $ 94,081.31
ame as Q4, with APR 5 8%
$ compounding
1,887.12 $monthly,392.01
we got monthly interest
$ 1,495.12 $ at92,586.19
0.67%. Using Excel PMT
6 your
formula, set [pv] with $ 1,887.12
loan principal$ $100,000,
385.78
nper 60$ months,
1,501.35you$will
91,084.84
get monthly payment of
7 $ 1,887.12 $ 379.52 $ 1,507.60 $ 89,577.24
$1,887.
8 $ 1,887.12 $ 373.24 $ 1,513.88 $ 88,063.36
Loan Principal 9 $$ 100,000.00
1,887.12 $ 366.93 $ 1,520.19 $ 86,543.16
APR 10 $ 5% $
1,887.12 360.60 $ 1,526.53 $ 85,016.64
Monthly rate 11 $ 0.42%
1,887.12 $ 354.24 $ 1,532.89 $ 83,483.75
Period 12 $ 60
1,887.12 $ 347.85 $ 1,539.27 $ 81,944.47
PMT 13 $ $ 1,887.12 $
1,887.12 341.44 $ 1,545.69 $ 80,398.79
14 $ 1,887.12 $ 334.99 $ 1,552.13 $ 78,846.66
15 $ 1,887.12 $ 328.53 $ 1,558.60 $ 77,288.06
B. If you were to pay
16 $off the loan at the
1,887.12 $ end of 3 years
322.03(after
$ already made
1,565.09 $ the monthly payment for
75,722.97
month 36), how much17 $do you1,887.12
have to pay$ in lump315.51 $ 1,571.61
sum at that $ 74,151.36
point? (Assume there are no fees or
18 $ 1,887.12 $ 308.96 $ 1,578.16 $ 72,573.20
penalties for the early payoff. Hint: Use Amortizing Table, or Excel function CUMPRINC).
19 $ 1,887.12 $ 302.39 $ 1,584.74 $ 70,988.47
Answer. 20 $ 1,887.12 $ 295.79 $ 1,591.34 $ 69,397.13
Using Amortizing 21 Table,
$ the principal
1,887.12 to$pay in lump after$paying
289.15 month$3667,799.16
1,597.97 installment, is $43,015.
Month 22 Payment
$ 1,887.12 Interest
$ 282.50 Principle
$ 1,604.63 Remaining
$ 66,194.53
230 $ 1,887.12 $ 275.81 $ 1,611.31 $ 64,583.22
$ 100,000.00
241 $$ 1,887.12
1,887.12 $ $ 269.10
416.67 $ $ 1,618.03
1,470.46 $ $ 62,965.19
98,529.54
252 $$ 1,887.12
1,887.12 $ $ 262.35
410.54 $ 1,476.58 $
$ 1,624.77 $ 61,340.43
97,052.96
263 $$ 1,887.12
1,887.12 $ $ 255.59
404.39 $ 1,482.74 $ 59,708.89
$ 1,631.54 $ 95,570.22
274 $$ 1,887.12
1,887.12 $ $ 248.79
398.21 $ 1,488.91 $ 58,070.55
$ 1,638.34 $ 94,081.31
285 $$ 1,887.12
1,887.12 $ $ 241.96
392.01 $ $ 1,645.16
1,495.12 $ $ 56,425.39
92,586.19
296 $$ 1,887.12
1,887.12 $ $ 235.11
385.78 $ 1,501.35 $ 54,773.37
$ 1,652.02 $ 91,084.84
….. 30 $ 1,887.12 $ 228.22
7 $ 1,887.12 $ 379.52 $ $ 1,658.90
1,507.60 $ $ 53,114.47
89,577.24
318 $$ 1,887.12
1,887.12 $ $ 221.31
373.24 $ 1,513.88 $ 51,448.66
$ 1,665.81 $ 88,063.36
329 $$ 1,887.12
1,887.12 $ $ 214.37
366.93 $ 1,520.19 $ 49,775.90
$ 1,672.75 $ 86,543.16
33
10 $ $ 1,887.12
1,887.12 $ $ 207.40
360.60 $ $ 1,679.72
1,526.53 $ $ 48,096.18
85,016.64
34
11 $ $ 1,887.12
1,887.12 $ $ 200.40
354.24 $ 1,532.89 $ 46,409.46
$ 1,686.72 $ 83,483.75
35
12 $ $ 1,887.12
1,887.12 $ $ 193.37
347.85 $ $ 1,693.75
1,539.27 $ $ 44,715.71
81,944.47
36
13 $ $ 1,887.12
1,887.12 $ $ 186.32
341.44 $ 1,545.69 $ 43,014.90
$ 1,700.81 $ 80,398.79
14 $ 1,887.12 $ 334.99 $ 1,552.13 $ 78,846.66
15 $ 1,887.12 $ 328.53 $ 1,558.60 $ 77,288.06
16 $ 1,887.12 $ 322.03 $ 1,565.09 $ 75,722.97
17 $ 1,887.12 $ 315.51 $ 1,571.61 $ 74,151.36
18 $ 1,887.12 $ 308.96 $ 1,578.16 $ 72,573.20
19 $ 1,887.12 $ 302.39 $ 1,584.74 $ 70,988.47
Haniyyah Hasna
FMBA Class of 2024
Assignment 1