Finding future value of a single lumpsum amount:

Problem: Today you deposited $5000 into a savings account paying 12% interest.
How much should you have in 15 years?

Solution:

PV= -5000
r= 0.12
nper= 15
m= 1
PMT 0
Type= 0

FV= $27,367.83

Solving for n:

Problem: At 8% how long would it take to triple your money?

PV= -1
r= 0.12
m= 1
FV= 3
PMT= 0
Type= 0

NPER= 9.69

Solving for r:

Your uncle lends you $1000 today with the promise that you pay him back
$1728 in three years. What rate of interest is he charging you?

PV= 1000
nper= 3
m= 1
FV= -1728
PMT= 0
Type= 0

r= 20.00%

Finding future value of a series of equal payment (Annuity):

You deposit $3,500 into an account every year for 6 years. The account
pays 7% interest. How much will you have at the end of that time?

If payment is made at the beginning of the period: If payment is made at the en

Annuity Due Ordinary Annuity
PV= 0 PV=
PMT= -3500 PMT=
r= 0.07 r=
nper= 6 nper=
m= 1 m=
Type= 1 Type=

FV= $26,789.07 FV=

You deposit $300 every six months for three years. Interest is 6%,
compounded semiannually. How much will you have in three years?

PV= 0
PMT= -300
r= 0.06
nper= 3
m= 2
Type= 0
FV= $1,940.52

Solving for payment

Find out the future value of the annuity of $4000 for 15 years. Then consider it as the PV of next 20 years payment and calcula

PV= 0 FV= 0
PMT= -4000 PV= ($149,118.86)
r= 0.12 r= 0.12
nper= 15 nper= 20
m= 1 m 1
Type= 0 Type= 0
FV= $149,118.86 PMT= $19,963.85

You have $100,000 to invest at 4% interest. If you wish to withdraw equal annual payments for 4 years, how much could you w

FV= 0
PV= ($100,000.00)
r= 0.04
nper= 4
m 1
Type= 0
PMT= $27,549.00

If your company borrows $300,000 at 8% interest and agrees to repay the loan in 10 equal semiannual payments to include pri

FV= 0
PV= ($300,000.00)
r= 0.08
nper= 5
m 2
Type= 0
PMT= $36,987.28

Solving for r

If you purchase a financial asset today at Tk.10,000 that agrees to pay you Tk.2,400 per year over the next 5 years, then what

PV= -10000
nper= 5
m= 1
PMT= 2500
FV= 0
Type= 0

r= 7.93%
If you purchase a financial asset today at Tk.10,000 that agrees to pay you Tk.200 per month over the next 5 years, then what

FV= 0
PV= -10000
nper= 5
m= 12
PMT= 220
Type= 0
r= 0.96% Annually= 11.51% EAR=

Your broker offers to sell you a note for $11,300 that will pay $2000 per
year for 10 years. If you buy the note, what rate of interest will you be
earning?

FV= 0
PMT= 2000
nper= 10
m= 1
PV= -11300
Type= $0.00
r= 12.00%

Your broker offers to sell you a note for $11,300 that will pay $1100 per
six month for 10 years. If you buy the note, what rate of interest will you be
earning?

FV= 0
PMT= 1100
nper= 10
m= 2
PV= -11300
Type= 0

r= 7.40% APR= 14.80% EAR=

Solving for nper

Suppose you pay $1,685 for an investment that promises to pay you $400 per
year. If the payments are made at the end of each year, how many payments
must you receive to earn a 6 percent return?
FV= 0
PV= 1685
r= 0.06
m= 1
PMT= -400
Type= 0
nper= 5.00

If you borrow Tk. 19660 today at 12% interest rate, then how many monthly payment of Tk.1000 you have to make?

FV= 0
PV= 19660
r= 0.12
m= 12
PMT= -1000
Type= 0
nper= 22.00

You have $42,180.53 in a brokerage account, and you plan to deposit an additional
$5,000 at the end of every future year until your account totals $250,000. You expect to
earn 12% annually on the account. How many years will it take to reach your goal?

PV= -42180.53
r= 0.12
m= 1
PMT= -5000
FV= 250000
Type= 0
nper= 11.00

Finding the present value of a single lumpsum amount:

Assume you have the opportunity to purchase an investment that promises to

pay you $3,041.63 in five years and your opportunity cost is 4 percent. How
much should you be willing to pay for this investment today? How would your
answer change if your opportunity cost is 6 percent?
FV= 3041.63 FV= 3041.63
r= 0.04 r= 0.06
nper= 5 nper= 5
m= 1 m= 1
PMT= 0 PMT= 0
Type= 0 Type= 0
PV= ($2,500.00) PV= ($2,272.88)

Finding the present value of a series of equal payment (Annuity):

Suppose you are considering an investment that pays $5,000 per year for 10
years and your opportunity cost is 7 percent interest. If you don’t receive the
first $5,000 payment until one year from today, what is the most you should be
willing to pay for the investment? How much would you be willing to pay if you
receive the first $5,000 payment today?

Ordinary annuity Annuity due

FV= 0 FV= 0
PMT= 5000 PMT= 5000
r= 0.07 r= 0.07
nper= 10 nper= 10
m= 1 m= 1
Type 0 Type= 1
PV= ($35,117.91) PV= ($37,576.16)

More frequently compounding or discounting

Find the future values of the following ordinary annuities:

a. FV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually

b. FV of $200 each three months for five years at a simple rate of 12 percent, compounded quarterly

PV= 0 PV= 0
PMT= -400 PMT= -200
r= 0.12 r= 0.12
nper= 5 nper= 5
m= 2 m= 4
Type= 0 Type= 0
FV= $5,272.32 FV= $5,374.07

Find the present values of the following ordinary annuities:

a. PV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually

b. PV of $200 each three months for five years at a simple rate of 12 percent, compounded quarterly

FV= 0 FV= 0
PMT= 400 PMT= 200
r= 0.12 r= 0.12
nper= 5 nper= 5
m= 2 m= 4
Type= 0 Type= 0
PV= ($2,944.03) PV= ($2,975.49)

Find the amount to which $500 will grow under each of the following conditions.
a. 12% compounded annually for 5 years
b. 12% compounded semiannually for 5 years
c. 12% compounded quarterly for 5 years
d. 12% compounded monthly for 5 years

a b c d
PV= -500 -500 -500 -500
r= 0.12 0.12 0.12 0.12
nper= 5 5 5 5
m= 1 2 4 12
PMT= 0 0 0 0
Type= 0 0 0 0
FV= $881.17 $895.42 $903.06 $908.35

Amortized Loan:

Your company is planning to borrow $50,000 on a 5-year, 7% annual payment, fully amortized term loan. What will be the ann
What amount of the payment made at the end of the second year will represent repayment of principal? Repayment of intere

FV= 0 FV= 0
PV= 50000 PV= 50000
r= 0.07 r= 0.07
nper= 5 nper= 5
m= 1 Per= 2
Type= 0 m= 1
Type 0
PMT= ($12,194.53) Principle payment ($9,303.15)

Amortization schedule:

Period Beg Balance PMT Interest Repayment of Principle Ending Bal

1 50000 $12,194.53 3500 $8,694.53 $41,305.47
2 $41,305.47 $12,194.53 2891.382569 $9,303.15 $32,002.31
3 $32,002.31 $12,194.53 2240.161919 $9,954.37 $22,047.94
4 $22,047.94 $12,194.53 1543.355823 $10,651.18 $11,396.76
5 $11,396.76 $12,194.53 797.7732996 $11,396.76 $0.00

Your company is planning to borrow $50,000 on a 5-year, 7% monthly payment, fully amortized term loan. What will be the mo
What amount of the payment made at the end of the second year will represent repayment of principal? Repayment of intere

FV= 0 FV= 0
PV= 50000 PV= 50000
r= 0.07 r= 0.07
nper= 5 nper= 5
m= 12 Per= 24
Type= 0 m= 12
PMT=
Type= 0
PMT= ($990.06) Principle payment ($798.36)

Period Beg Balance PMT Interest Repayment of Principle Ending Bal

1 50000 $990.06 291.67 $698.39 $49,301.61
2 $49,301.61 $990.06 287.59 $702.47 $48,599.14
3 $48,599.14 $990.06 283.49 $706.56 $47,892.57
4 $47,892.57 $990.06 279.37 $710.69 $47,181.89
5 $47,181.89 $990.06 275.23 $714.83 $46,467.06
6 $46,467.06 $990.06 271.06 $719.00 $45,748.05
7 $45,748.05 $990.06 266.86 $723.20 $45,024.86
8 $45,024.86 $990.06 262.65 $727.41 $44,297.44
9 $44,297.44 $990.06 258.40 $731.66 $43,565.78
10 $43,565.78 $990.06 254.13 $735.93 $42,829.86
11 $42,829.86 $990.06 249.84 $740.22 $42,089.64
12 $42,089.64 $990.06 245.52 $744.54 $41,345.10
13 $41,345.10 $990.06 241.18 $748.88 $40,596.22
14 $40,596.22 $990.06 236.81 $753.25 $39,842.97
15 $39,842.97 $990.06 232.42 $757.64 $39,085.33
16 $39,085.33 $990.06 228.00 $762.06 $38,323.27
17 $38,323.27 $990.06 223.55 $766.51 $37,556.76
18 $37,556.76 $990.06 219.08 $770.98 $36,785.78
19 $36,785.78 $990.06 214.58 $775.48 $36,010.31
20 $36,010.31 $990.06 210.06 $780.00 $35,230.31
21 $35,230.31 $990.06 205.51 $784.55 $34,445.76
22 $34,445.76 $990.06 200.93 $789.13 $33,656.63
23 $33,656.63 $990.06 196.33 $793.73 $32,862.90
24 $32,862.90 $990.06 191.70 $798.36 $32,064.54
25 $32,064.54 $990.06 187.04 $803.02 $31,261.52
26 $31,261.52 $990.06 182.36 $807.70 $30,453.82
27 $30,453.82 $990.06 177.65 $812.41 $29,641.41
28 $29,641.41 $990.06 172.91 $817.15 $28,824.26
29 $28,824.26 $990.06 168.14 $821.92 $28,002.34
30 $28,002.34 $990.06 163.35 $826.71 $27,175.63
31 $27,175.63 $990.06 158.52 $831.54 $26,344.09
32 $26,344.09 $990.06 153.67 $836.39 $25,507.71
33 $25,507.71 $990.06 148.79 $841.26 $24,666.44
34 $24,666.44 $990.06 143.89 $846.17 $23,820.27
35 $23,820.27 $990.06 138.95 $851.11 $22,969.16
36 $22,969.16 $990.06 133.99 $856.07 $22,113.09
37 $22,113.09 $990.06 128.99 $861.07 $21,252.02
38 $21,252.02 $990.06 123.97 $866.09 $20,385.93
39 $20,385.93 $990.06 118.92 $871.14 $19,514.79
40 $19,514.79 $990.06 113.84 $876.22 $18,638.56
41 $18,638.56 $990.06 108.72 $881.33 $17,757.23
42 $17,757.23 $990.06 103.58 $886.48 $16,870.75
43 $16,870.75 $990.06 98.41 $891.65 $15,979.11
44 $15,979.11 $990.06 93.21 $896.85 $15,082.26
45 $15,082.26 $990.06 87.98 $902.08 $14,180.18
46 $14,180.18 $990.06 82.72 $907.34 $13,272.84
47 $13,272.84 $990.06 77.42 $912.64 $12,360.20
48 $12,360.20 $990.06 72.10 $917.96 $11,442.24
49 $11,442.24 $990.06 66.75 $923.31 $10,518.93
50 $10,518.93 $990.06 61.36 $928.70 $9,590.23
51 $9,590.23 $990.06 55.94 $934.12 $8,656.11
52 $8,656.11 $990.06 50.49 $939.57 $7,716.55
53 $7,716.55 $990.06 45.01 $945.05 $6,771.50
54 $6,771.50 $990.06 39.50 $950.56 $5,820.94
55 $5,820.94 $990.06 33.96 $956.10 $4,864.83
56 $4,864.83 $990.06 28.38 $961.68 $3,903.15
57 $3,903.15 $990.06 22.77 $967.29 $2,935.86
58 $2,935.86 $990.06 17.13 $972.93 $1,962.93
59 $1,962.93 $990.06 11.45 $978.61 $984.32
60 $984.32 $990.06 5.74 $984.32 $0.00
 If payment is made at the end of the period:
Ordinary Annuity
0
-3500
0.07
6
1
0

$25,036.52

20 years payment and calculate the payment. Interest rate is 12%.

years, how much could you withdraw each year and leave $0 in the investment account?

nnual payments to include principal plus interest, how much would those payments be?

r the next 5 years, then what interest rate you are getting?
r the next 5 years, then what interest rate you are getting periodically? Annually?

12.14%

15.35%
0 you have to make?
rm loan. What will be the annual payment?
rincipal? Repayment of interest?

FV= 0
 PV= 50000
r= 0.07
nper= 5
Per= 2
m= 1
Type= 0
Interest payment ($2,891.38)

erm loan. What will be the monthly payment?

rincipal? Repayment of interest?

FV= 0
PV= 50000
r= 0.07
nper= 5
Per= 24
m= 12
PMT=
Type= 0
Interest payment ($191.70)