Solved: HOMEWORK #8-Financial Formulas in Excel

HOMEWORK #8

1. How much interest is earned in an account by the end of 5 years if $30,000 is deposited and interest is 4% per year, compounded semi-annually?
2. What is the balance in an account at the end of 10 years if $6,500 is deposited today and the account earns 3% interest compounded annually?
3. If you wish to accumulate $50,000 in 10 years, how much must you deposit today in an account that pays annual interest rate of 8%, with semi-annual compounding of interest?
4. If you deposit 20,000 per year for 6 years in an account that pays an annual interest rate of 6%, what will your account be worth at the end of 6 years?
5. You decide that you need $88,000 in 10 years in order to make a down payment on a house. You plan to make annual deposits to achieve your goal. If interest rate is 8%, how much should be deposited each time? Hint use the Financial Function PMT to solve for the payment and PV will be zero.
6. You owe $46,000 to your parents for funding some of your college. You promise to make 8 annual payments of $8,000 to settle your debt. Approximately what interest rate are your parents charging (estimated up to 2 decimal places), if you make the 8 annual payments beginning one year from now? Hint use the Financial Function �RATE�. Note if you need help use the �Help on this function� feature.� This help will include an example for you to follow.
7. You are offered an investment that will pay $36,300 per year for 9 years. If you feel that the appropriate discount rate is 7%, what is the investment worth to you today?
8. Your grandparents offered you some money. You are offered the following options. Assuming an annual interest rate of 5.0%, which option should you choose? Show your work for each alternative
9. Receive $20,000 immediately
10. Receive $3,200 at the end of each six months for four years. You will receive the first check in six months
11. Receive $2,900 at the end of each year for four years, and then $20,000 at the end of the fifth year.