55%(11)6 out of 11 people found this document helpful
This preview shows page 1 - 9 out of 22 pages.
Problem Set 3: Financial Tools Part TwoUse Excel and the Chapter 5 Excel resource found at the end of each chapter of the textbook (if neComplete the following problems from Chapter 5 in Principles of Managerial Finance:
P5–3 Future valueYou have $100 to invest. If you put the money into an account earning 5% inthow much money will you have in 10 years? How much money will you have in 10 years if the ac
terest compounded annually, ccount pays 5% simple interest?
a. Find how much you will have accumulated in the account after (1) 3 years, (2) 6 years, and (3) 9 yeab. Use your findings in part a to calculate the amount of interest earned in (1) the first 3 years (years 1c. Compare and contrast your findings in part b. Explain why the amount of inter-est earned increasesP5–5 Time valueYou have $1,500 to invest today at 7% interest compounded annually.
ars. 1 to 3), (2) the second 3 years (years 4 to 6), and (3) the third 3 years (years 7 to 9). s in each succeeding 3-year period.
b. What is the present value of $6,000 that you will receive after 6 years if the dis-count rate is 12%? c. What is the most you would spend today for an investment that will pay $6,000 in 6 years if your oppd. Compare, contrast, and discuss your findings in parts a through c. P5–12 Present value conceptAnswer each of the following questons. a. How much money would you have to invest today to accumulate $6,000 after 6 years if the rate of re