You are considering a savings plan that calls for a deposit of $12,000 at the beginning of each of the next five years. If the plan offers an interest rate of 8 percent, how much will you accumulate at the end of year 5?
Do this calculation by completing the following template using Excel. Your spreadsheet will do the FV calculation twice - once using the FV function (in Cell B4) and once using a simple table that shows the accumulation at the beginning of each year that would be similar to what you would show a client that does not understand future value accumulation very well.
A | B | C | D | |
1 | Annual payment | 12,000 | ||
2 | Interest rate | 8% | ||
3 | Number of years | 5 | ||
4 | Total value | <--Use FV function | ||
5 | ||||
6 | Year | Accumulation at beginning of year | Payment at end of year | Annual interest |
7 | 1 | 0 | 12,000 | 0 |
8 | 2 | 12,000 | 12,000 | |
9 | 3 | |||
10 | 4 | |||
11 | 5 | |||
12 | 6 |
first part we use FV function which takes 5 parameters
=FV(rate, nper,pmt,(pv),(fv) )
by putting values =FV(8%,5,12000,0,0)
future value if payment made in the end =70399.21
future value if payment made in the beginning =76031. 15
year accumulation at beg. payment at end interest
1 0 12000 0
2 12000 12000 163.64
3 12000 12000 1996.80
4 12000 12000 3116.54
5 12000 12000 4325.87
for calculating interest we use IPMT function
for accumulation at beginning we use PMT function
You are considering a savings plan that calls for a deposit of $12,000 at the beginning...
You are considering a savings plan that calls for a deposit of $12,000 at the BEGINNING of each of the next five years. If the plan offers an interest rate of 8 percent, how much will you accumulate at the end of year 5? Do this calculation by completing the following template using Excel. Your spreadsheet will do the FV calculation twice - once using the FV function (in Cell B4) and once using a simple table that shows the...
You are considering a savings plan that calls for a deposit of $12,000 at the end of each of the next five years. If the plan offers an interest rate of 8 percent, how much will you accumulate at the end of year 5? Do this calculation by completing the following template using Excel. Your spreadsheet will do the FV calculation twice - once using the FV function (in Cell B4) and once using a simple table that shows the...
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You deposit $12,000 annually into a life insurance fund for the next 30 years, after which time you plan to retire. (LG 15-2) If the deposits are made at the beginning of the year and earn an interest rate of 7 percent, what will be the amount of retirement funds at the end of year 30? Instead of a lump sum, you wish to receive annuities for the next 20 years (years 31 through 50). What is the constant annual...
You agree to deposit $500 at the beginning of each month into a
bank account for the next 24 months. At the end of the 24th month,
you will have $13,000 in your account. If the bank compounds
interest monthly, what annual interest rate will you have
earned?
Note: Only use the formula listed and show the steps of how you
reached the answer, I don't need to know just the answer, I'm
trying to learn. Thank you. Don't use...
You agree to deposit $500 at the beginning of each month into a
bank account for the next 24 months. At the end of the 24th month,
you will have $13,000 in your account. If the bank compounds
interest monthly, what annual interest rate will you have
earned?
Note: Please post the formula used to solve the question and
list the steps taken to reach the answer, please don't use excel. I
provided a list of formulas, please state the...