Question

Use the PV function in Excel to calculate what you would have to invest in a savings account today if you wanted to accumulate $1,216.65 in five years and could invest at 4% per year with interest paid and compounded annually.

Answer 1

To access the PV function in excel, go to formulas, financial and select PV function.

Amount to be invested today in the savings account $\approx$ $ 1040

File fx Home Insert Page Layout Formulas Data Review View Help Tell me what you want to do ? - Trace Prec © Define Name e А Fit Use in Formula Trace Depe AutoSum Recently Financial Logical Text Date & Lookup & Math & More Name Used Time Reference Trig Functions Manager Create from Selection Remove A Function Library Defined Names Σ Insert Function B6 for =PV(B1,B2,B3,-B4,B5) Function Arguments A B ? Х PV Rate B1 = 0.04 4% 4 0 $1,216.65 0 Nper B2 1 4 Pmt B3 = 0 1 Rate 2 Nper 3 PMT 4 FV 5 Type Amount to be invested 6 today 7 8 + + Fv -B4 -1216.65 1 = 0 33,-B4,B5) Type BS = 1039.997519 Returns the present value of an investment: the total amount that a series of future payments is worth now. Type is a logical value: payment at the beginning of the period = 1; payment at the end of the period = 0 or omitted. 9 10 11 Formula result = 1039.997519 12 13 Help on this function OK Cancel 14