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1) Suppose that you are planning to buy a boat in 27 years [to be entered into cell B2] for an amount of $100,000 [cell B1] at that time, and you earn an average annually compounding rate of return of 12% per year [to be entered into cell B3]
1)
| Suppose that you are planning to buy a boat in 27 years [to be entered into cell B2] for an amount of $100,000 [cell B1] at that time, and you earn an average annually compounding rate of return of 12% per year [to be entered into cell B3]. |
| (a) | How much money would you need to invest today as a lump sum to achieve your goal [cell B5]? There are no additional deposits or payments. Use the PV function. |
| (b) | What is the correct formula (using 16 characters or less) that should be placed in cell B5? Note: There are to be NO numbers in the function call (apart from a 0 if appropriate), only cell references, or negative cell references where appropriate. Additional Note: For some reason, in the PV function, the f.v. represents an amount that is being paid out, not received. So the present value of something being paid out is a negative number. The correct answer to this question is the use of the PV function that returns the correct positive value. |
2)
| Suppose that you are planning to buy a boat in the future for $100,000 [cell B2] and you deposit a lump sum of $60,000 CAD [cell B1] that earns an average annually compounding rate of return of 13% per year [cell B3]. |
| (a) | How long (in years) would it take [cell B5] until you accumulate the lump sum needed? Use the NPER function. |
| (b) | What is the correct formula (using 18 characters or less) that should be placed in cell B5? Note: There are to be NO numbers in the function call (apart from a 0 if appropriate), only cell references, or negative cell references where appropriate. |
Expert Solution
1)
Part (a):
Amount required to be invested today = $4,689.36
As follows:
Part (b):
Correct formula =PV(B3,B2,0,B1*-1,0)
Where
B3= Rate= Rate of return,
B2= NPER= Period
B1= FV= Future value and
B4= PMT= Periodical payment
please see the attached file for the complet solution.
2)Please use this google drive link to download the answer file.
https://drive.google.com/file/d/11P31dhDhxyazkQHXid0bkrLshdzchutI/view?usp=sharing
Note: If you have any trouble in viewing/downloading the answer from the given link, please use this below guide to understand the whole process.
https://helpinhomework.org/blog/how-to-obtain-answer-through-google-drive-link
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