1) Computation of the total interest:-

PV = $500,000*(1-20%)

= $400,000

FV = PV*(1+rate)^n

= $400,000*(1+3%)^30

= $400,000*2.42726

= $970,904.99

Total interest = Future value - Present value

= $970,904.99 - $400,000

= $570,904.99

 

 

2) We can calculate the future value of ordinary annuity by using the following formula in excel:-

=fv(rate,nper,-pmt,pv)

Here,

FV = Future value of ordinary annuity

Rate = 7%

Nper = 5 periods

Pmt = $300

PV = $0

Substituting the values in formula:

= fv(7%,5,-300,0)

= $1,725.22

 

We can calculate the future value of annuity due by using the following formula in excel:-

=fv(rate,nper,-pmt,pv,type)

Here,

FV = Future value of annuity due

Rate = 7%

Nper = 5 periods

Pmt = $300

PV = $0

Type = 1

Substituting the values in formula:

= fv(7%,5,-300,0,1)

= $1,845.99