The file “WSample.xlsx” contains questions, with answers and using Excel to do the calculation using normal formulas. “Week 8 Problems.xls” contains 3 questions, these need to be solved just like the questions in “WSample.xlsx”, showing detailed calculations to get same answer as the one given in bold. PLEASE MAKE SURE THAT THIS IS FORMATTED JUST LIKE THE WORK IN “WSample.xlsx”.

1 | If you deposit $15,000 today and earn 8% annual interest, how much will you have in 9 years? | |||||

Answer: | $29,985.07 | Using the Excel Future Value function. (Interest rate, pay periods, and present value). | ||||

Calculated Answer: | Amount | Interest | Total | |||

$15,000.00 | $1,200.00 | $16,200.00 | ||||

$16,200.00 | $1,296.00 | $17,496.00 | ||||

$17,496.00 | $1,399.68 | $18,895.68 | ||||

$18,895.68 | $1,511.65 | $20,407.33 | ||||

$20,407.33 | $1,632.59 | $22,039.92 | ||||

$22,039.92 | $1,763.19 | $23,803.11 | ||||

$23,803.11 | $1,904.25 | $25,707.36 | ||||

$25,707.36 | $2,056.59 | $27,763.95 | ||||

$27,763.95 | $2,221.12 | $29,985.07 | ||||

Calculated Total: | $29,985.07 | Since the interest calculated is compounded, the earned interest adds to the interest accumulated in the past terms. | ||||

2 | Tiffany will receive a graduation gift of $10,000 from her parents in 3 years. If the discount rate | |||||

is 7%, what is this gift worth today? | ||||||

Answer: | $8,162.98 | Using the Excel Present Value function. (Interest rate, pay periods, and future value). | ||||

Term in years | Amount | Discount | 1 / (1+d)^term | amount * 1 / (1+d)^term | ||

3 | $10,000.00 | 0.07 | 0.816297877 | $8,162.98 | ||

Calculated Answer: | $8,162.98 | Calculated using the Present Value method – PV = FV * [ 1 / (1 + i)^n ] | ||||

3 | What is the present value of a 20-year ordinary annuity of $30,000 using a 6% discount rate? | |||||

Answer: | $3,44,097.64 | Using the Excel Present Value function. (Interest rate, pay periods, payment each period). | ||||

Term in years | Amount | Discount | 1 – (1+d)^-term | (1 – (1+d)^-term ) / d | amount * [(1 – (1+d)^-term ) / d] | |

20 | $30,000.00 | 0.06 | 0.688195273 | 11.46992122 | $3,44,097.64 | |

Calculated Answer: | $3,44,097.64 | Calculated using the Present Value method for Ordinary Annuities: PV = FV * [ (1 – (1 + i)^-n) / i ] | ||||

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