Question

Calculate the following time value of money problems using Microsoft® Excel®:

1. If we place $8,592.00 in a savings account paying 7.5 percent interest compounded annually, how much will our account accrue to in 9.5 years?

2. What is the present value of $992 to be received in 13.5 years from today if our discount rate is 3.5 percent?

3. If you bought a stock for $45 dollars and could sell it fifteen years later for three times what you originally paid. What was your return on owning this stock?

4. Suppose you bought a house for $3,250,000 to make it a nursing home in the future. But you have not committed to the project and will decide in nine years whether to go forward with it or sell off the house. If real estate values increase annually at 1.5%, how much can you expect to sell the house for in nine years if you choose not to proceed with the nursing home project?

5. If your daughter wants to earn $215,000 within the next twenty-three years and the salaries grow at 4.45% per year. What salary should she start to reach her goal?

Answer 1

As asked, I have used excel to find the solution.

Below is the screenshot of the formula applied to get the result -

Below is the screenshot of the result obtained in excel -