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Homework answers / question archive / For this section, use workbook Time

For this section, use workbook **Time.xlsx**. This section is slightly different in that you have to create the formulas in each worksheet and then answer additional questions. For full credit, I need to see the use of the function and formula features of Excel. You must use the appropriate function/formula to earn full credit and the answers must be in the highlighted cells with a surrounding border.

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**Cash Flow**: Earnings before depreciation, etc.

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**Discount Rate:** Interest rate

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**Future Value**: The value of an asset at a certain point in the future when its return is a known factor.

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**Period**: The time span in which certain financial events took place.

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**Present Value**: The current worth of a future sum of money or stream of cash flows given a specified rate of return

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**Annuity Future Value: **Equals (*Payment*) * (((1 + (*Discount Rate/Period)*) ^ (*Number of Periods*)) - 1) / (*Discount Rate/Period*)

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**Future Value**: Equals (*Cash Flow*) * ((1 + (*Discount Rate/Period)*) ^ ((*Number of Periods*) – (*Current Period*))

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**Future Value of Each Cash Flow**: Equals (*Cash Flow*) * ((1 + (*Discount Rate/Period*)) ^ ((*Number of Periods*) – (*Current Period*))

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**Beginning Principal Balance in Year T**: Equals (*Beginning Principal Balance in year t-1*) - (*Principal Component in year t-1*)

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**Interest Component in Year T**: Equals (*Interest rate/year*) * (*Beginning Principal Balance in year t*)

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**Principal Component in Year T**: Equals (*Payment*) - (*Interest component*)

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**Annuity Present Value: **Equals (*Payment*) * (1 – ((1 + (*Discount Rate/Period)*) ^ (-*Number of Periods*))) / (*Discount Rate/Period*)

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**Present Value**: Equals (*Cash Flow*) / ((1 + (*Discount Rate/Period)*) ^ (*Number of Periods)*)

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**Present Value of Each Cash Flow**: Equals (*Cash Flow*) / ((1 + (*Discount Rate/Period)*) ^ (*Period)*)

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- A cash flow of $747.25 is available now (in Period 0). For this cash flow, the appropriate discount rate/period is 6.0%. What is the period 5 future value? Use worksheet “Single-FV”.
- An annuity pays $80.00 each period for 5 periods. For these cash flows, the appropriate discount rate/period is 6.0%. What is the period 5 future value? Use worksheet “Annuity-FV”.

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- A cash flow of $1,000.00 will be received in period 5. For this cash flow, the appropriate discount rate/period is 6.0%. What is the present value of this single cash flow? Use worksheet “Single-PV”.
- An annuity pays $80.00 each period for 5 periods. For these cash flows, the appropriate discount rate/period is 6.0%. What is the present value of this annuity? Use worksheet “Annuity-PV”.

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