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Time Value of Money - EXCEL

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5 views4 pages

Time Value of Money - EXCEL

Uploaded by

gurnoorkaurgilll
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Time Value of Money (EXCEL)

Rate Interest rate


Nper Number of periods
Pmt Annuity payment
Pv Present value
Fv Future value
Type Payment, beginning of period 1
Type Payment, end of period 0 (default)

Future Value of a Single Payment


(4-1) How much money will you have in your bank account in 5 years if it pays 4% annually
and you start with $5,000.
Interest Rate (rate)
Number of periods (nper)
Annuity payment (pmt)
Present value (PV)
FUNCTION =FV(rate, nper, pmt, [PV], [type])

FUTURE VALUE

Present Value of a Single Payment


(4-2) What is the present value of a security that will pay $20,000 in 20 years?
Securities of equal risk pay 7% annually.
Interest Rate (rate)
Period (nper)
Annuity payment (pmt)
Future value (FV)
FUNCTION =PV(rate, nper, pmt, [FV], [type])

PRESENT VALUE

Interest Rate of a Single Payment


(4-3) Your parents will retire in 18 years and they think they will need $1,000,000 at retirement.
What annual interest rate must they earn to reach their goal, based on the starting amount
of $50,000.
Period (nper)
Annuity payment (pmt)
Present value (PV)
Future value (FV)
FUNCTION =RATE(nper, pmt, pv, [fv], [type], [guess])

Rate

Number of Periods for a Single Payment


(4-4) If you deposit money in an account today, how long will it take to triple your money based
on the annual interest rate of 2.5%.
Interest Rate (rate)
Annuity payment (pmt)
Present value (PV)
Future value (FV)
FUNCTION =NPER(rate, pmt, pv, [fv], [type])

Number of periods

Future Value of an Annuity


(4-12) Find the future value of the following annuity
1. $400 per year for 10 years at 10%.
Interest Rate (rate)
Period (nper)
Annuity payment (pmt)
Present value (PV)
FUNCTION =FV(rate, nper, pmt, [PV], [type])

FUTURE VALUE

Present Value of an Annuity


(4-13) Find the present value of the following ordinary annuities:
1. $400 per year for 10 years at 10%.
Interest Rate (rate)
Period (nper)
Annuity payment (pmt)
Future value (FV)
FUNCTION =PV(rate, nper, pmt, [FV], [type])

PRESENT VALUE

Effective Rate of Interest


(4-15) Find the interest rates, or rates of return, on each of the following:
3. You borrow $85,000 and promise to pay back $201,229 at the end of 10 years.
Period (nper)
Annuity payment (pmt)
Present value (PV)
Future value (FV)
FUNCTION =RATE(nper, pmt, pv, [fv], [type], [guess])

Rate

Future Value for Various Compounding Periods


(4-16) Find the amount to which $2,000 will grow under the following condition:
3. 10% compounded quarterly for 5 years.
Interest Rate (rate per period)
Period (nper)
Annuity payment (pmt)
Present value (PV)
FUNCTION =FV(rate, nper, pmt, [PV], [type])

FUTURE VALUE
retirement.

ney based

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