Chapter+5+Spreadsheet+Model

Chapter+5+Spreadsheet+Model - 12-10-08 05 Chapt er model...

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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, 1 5.76. Table 5-1. Summary of Future Value Calculations -$10 .0 5.0 % 3 Periods: 0 1 2 3 | | | | Cash Flow Time Line: -$10 FV = ? Step-by-Step Ap roach: $10 $105.0 $1 0.25 $1 5.76 = $1 5.76 3 5 -$10 .0 $0 Calculator Ap roach: N I/YR PV PMT FV $1 5.76 Excel Ap roach: Fixed inputs: $1 5.76 Cel references: $1 5.76 The Compounding Proces : A Graphic View You can work this problem in the same ways that we discus ed above. Table 5-2. Summary of Present Value Calculations $1 5.76 Interest rate = I = 5.0 % No. of periods = N = 3 Periods: 0 1 2 3 | | | | Cash Flow Time Line: PV = ? $1 5.76 Step-by-Step Ap roach: $10 .0 $105.0 $1 0.25 $1 5.76 = $10 .0 3 5 $0 $1 5.76 Calculator Ap roach: N I/YR PV PMT FV -$10 .0 Excel Ap roach: PV Function: Fixed inputs: -$10 .0 Cel references: -$10 .0 In the Excel formula, 0 indicates that there are no intermediate cash flows. The Discounting Proces : A Graphic View Present value (PV) -$10 .0 Future value (FV) $150.0 No. of years (N) 10 Interest rate function = RATE(N,0,PV,FV) Interest rate (I) 4.14% =RATE(C1 1,0,C109,C1 0) Present value (PV) -$50 ,0 0 Future value (FV) $1,0 0,0 0 Interest rate (I) 4.50% No. of years (N) =NPER(I,0,PV,FV) No. of years (N) 15.7473 =NPER(C12 ,0,C120,C121) Table 5-3. Summary: Future Value of an Ordinary An uity Payment amount = PMT = $10 .0 Interest rate = I = 5.0 % 3 Periods: 0 1 2 3 | | | | Cash Flow Time Line: -$10 -$10 -$10 -$10 .0 Multiply each payment by -$105.0 -$1 0.25 -$315.25 Formula Ap roach: = $315.25 3 5 $0 -$10 .0 Calculator Ap roach: N I/YR PV PMT FV $315.25 Excel Function Ap roach: FV Function: Fixed inputs: $315.25 Cel references: $315.25 Summary: Future Value of an An uity Due (Diagram Not in Text) Payment amount = PMT = $10 .0 Interest rate = I = 5.0 % Number of periods = N = 3 Periods: 0 1 2 3 | | | | Cash Flow Time Line: -$10 -$10 -$10 -$105.0 Multiply each payment by -$1 0.25 -$1 5.76 -$3 1.01 Formula Ap roach: = $3 1.01 BEG MODE 3 5 0 -10 Calculator Ap roach: N I PV PMT FV 3 1.01 Excel Function Ap roach: FV Function: Fixed inputs: 3 1.01 Cel references: 3 1.01 Excel entries cor espond with these calculator keys: FV Summary: Present Value of an Ordinary An uity Payment amount = PMT = $10 .0 Interest rate = I = 5.0 % Number of periods = N = 3 Periods: 0 1 2 3 | | | | Cash Flow Time Line: -$10 -$10 -$10 $95.24 Divide each payment by $90.70 $86.38 $272.32 Formula Ap roach: = $272.32 3 5 -10 0 Calculator Ap roach: N I PV PMT FV 272.32 Excel Function Ap roach: PV Function: Fixed inputs: 272.32 Cel references: 272.32 Excel entries cor espond with these calculator keys: PV Summary: Present Value of an An uity Due (Not in text; this is a "bonus") Payment amount = PMT = $10 .0 Interest rate = I = 5.0 % Number of periods = N = 3 Periods: 0 1 2 3 | | | | Cash Flow Time Line: -$10 -$10 -$10 -$10 .0 Divide each payment by -$95.24 -$90.70 -$285.94 Formula Ap roach: = $285.94 BEG MODE 3 5 -10 0 Calculator Ap roach: N I PV
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This note was uploaded on 01/11/2012 for the course FIN 3403 taught by Professor Tapley during the Fall '06 term at University of Florida.

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Chapter+5+Spreadsheet+Model - 12-10-08 05 Chapt er model...

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