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Chap 5 Excel Example FIN320

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14 views

Chap 5 Excel Example FIN320

Uploaded by

Như Quỳnh
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Example 1: Future value

Interest rate 6%
Number of years 5
Deposit 100 cash outflow -> minus sign

Future value $133.82

Example 2: Present value

Future value 500


Number of years 3
Interest rate 4%

Present value ($444.50) cash outflow -> minus sign

Example 3: Interest rate

Present value 35000 cash outflow -> minus sign


Future value 80000
Number of years 8

Interest rate 10.89%

Example 4: Number of periods

Present value 2300 cash outflow -> minus sign


Future value 10000
Interest rate 5%

Number of periods 30.12

Example 5: Future value


Yearly compounding Monthly compounding
Deposit 1000 1000
Interest rate 13% 13%
Number of years 7 7
Number of compounding per year 1 12

Future value $2,352.61 $2,472.19

Example 6: Present value


Quarterly compounding
Future value 500
Number of years 3
Interest rate 6%
Number of compounding per year 4

Present value ($418.19) cash outflow -> minus sign


Future value > 0; Present value, Deposit < 0
Present value of multiple unequal cash flows - NPV
t Cash flow
1 4000
2 5000

Interest rate 8%

Present value $7,990.40

t Cash flow
1 200
2 350
3 0
4 450

Interest rate 12%

Present value $743.57


Example 1: Present value for annuity

Annual payment 8000 >>>> annual compounding


No of years 3
Discount rate 10%

Present value of ordinary annuity $19,894.82


Present value of annuity due $21,884.30 BEGINNING OF PERIOD

Example 2: Present value for annuity

Annual payment 1000


No of years for payment 3
Interest rate 11%

Present value $2,443.71

Example 3: Annuity payment

Car loan 15000 >>> PV = loan = cash inflow


Number of years for each payment 4
Interest rate 6%

Monthly payment ($352.28) >>> monthly compounding

Example 4: Future value for annuity

Monthly savings 1000


Number of years to save 30
Interest rate 10%

Future value $2,260,487.92

Example 5: Future value of annuity due

Beginning of each year annuity deposit 2000


Number of years to save 30
Interest rate 10%

Future value $361,886.85

Example 6: Finding the interest rate


Retirement goal 1500000
Annual amount to save 10000
Number of years to save 30

Interest rate 9.51% >>> 2 decimal places

Example 7: Finding number of payments

Amount owned 1000


Monthly payment 20
Interest rate 18%

Number of months to pay off 93.11

Example 8: Semi-annual payment

Semi-annual payment 400


Number of years 3
Discount rate 8%

PV of ordinary annuity (end) $2,096.85


PV of annuity due (beg) $2,180.73

FV of ordinary annuity (end) $2,653.19


FV of annuity due (beg) $2,759.32
PMT = payment/deposit = cash outflow = NEGATIVE sign
PV = borrowed money = POSITIVE sign

cash inflow

mpounding
Example 1: Computing Effective Annual Rate (EAR) - EFFECT

APR 12%
Compounding periods per year 12

EAR 12.68% >>> change into percent w 2 decimal places

Example 2: Computing Annual Percentage rat

EAR 18%
Compounding periods per year 4

APR 16.90%
decimal places

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