1
05 Chapter model
12-10-08
Chapter 5.
The Time Value of Money
Then, when you hit the enter key, you get the answer, 115.76.
This model is STRICTLY OPTIONAL.
Neither students nor instructors need to go through it.
However, if
someone wants to practice with Excel, then the model can be useful.
Also, on the tabs we show solutions
for the within-chapter self-test questions.
••
The "Main Model" performs the calculations required for Chapter 5, and was used to create many of the
chapter exhibits (Tables and Figures).
We pasted in a few dialog boxes for specific Excel functions and
features and show then off to the right of where they apply.
However, in general we encourage students
who want to know more about Excel to use the Excel Tutorial and refer to it as necessary.
We also let
students know that Excel models can be used to create tables and graphs that can then be copied into Word
documents, which is the way we prepared the text manuscript for submission to the publisher.
That
procedure is used often in business to prepare reports.
Although answers to the Self-Test questions within the chapter are generally quite easy and were found with
a calculator, we also solved some of them with Excel as a check and to provide additional information on
the solutions in case students have questions. The tabs at the lower part of this screen take you to these
solutions.
Even if students are not familiar with Excel, they should still be able to see the solution setup
and then work out the answer with a calculator.
Although we did not create the model specifically for use in
lectures, it could be used as a lecture vehicle in a classroom where a projector is attached to a computer.
The instructor could scroll through the model and lecture on points as they come up.
This would be more
useful if students have some familiarity with Excel, but that is not really necessary because everything the
model does can also be done with a financial calculator.
Finally, if we do something in Excel that you don't understand, you might look at our Excel Tutorial, which
explains a lot of points related to Excel.
For example, it discusses in some detail how to enter functions to
do various math operations, how to make graphs, and lots of other things we commonly do with Excel in
finance.
FUTURE VALUES
(Section 5-2)
Note on Excel
:
You can do calculations in Excel in several different ways. Always start with the pointer on
the cell where you want the answer displayed.
Then do one of the following:
(1) Enter an equal sign on the
formula bar (which is right after the fx), then write out an equation, like =(1.05)^3*100 to get 1.05 to the 3rd
power times 100. Hit Enter after typing the equation and you get the answer, 115.76.
(2) Use a dialog box as
shown below and to the right. Click on fx , then Financial, then FV, then OK to get the box.
Then fill in the
rate, number of periods, periodic payments, and present value. Hit OK to get the answer, 115.76.
(3) Put the
pointer just to the right of the fx and type =
. Since you know you want FV, type FV(
, i.e., FV and a left
parenthesis. As soon as you enter the left paren, an equation will appear below the line to prompt you about

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