Question

Calculate the interest rate and future value.

ALL ANSWERS MUST BE IN EXCEL FORMULA FORMAT

In 1895, the first U.S. Putting Green Championship was held. The winner's prize money was $150. In 2010, the winner's check was $1,350,000. What was the percentage increase per year in the winner's check over this period? If the winner's prize increases at the same rate, what will it be in 2040? $ 150 Present value Years Future value $ 115 1,350,000 Years 30 Complete the following analysis. Do not hard code values in your answers. All answers should be positive values. Interest rate Future value

Answer 1

Below screenshot shows the calculation:

А в Present Value $ 150.00 Years 115 Future Value $ 13,50,000.00 Years 30 16 Interest Rate 8.24% 17 18 Future value $ 145,16,947.05

Following screen shot shows the formula for these calculations:

A D 150 Present Value Years Future Value 115 1350000 Years 30 Interest Rate =+(D9/D7)^(1/D8)-1 Future value =+D9*(1+D16)^D11

Explanation:

Growth rate can be calculated by solving the following equation:

Future value rategrowth = V Present value 2-1) X 100

1350000 rategrowth = ( 150 -1) x 100

rategrowth = 8.24%

Future value can be calculated as follows:

FV = PV X (1+rategrowth)

FV = 1350000 (1+0.0824) 30

FV = 14,516,947.05

Also, we can use excel inbuilt functions to come up with the same figures:

Present Value Years 150 115 1350000 Future Value Years 30 Interest Rate =+RATE(D8,0,-D7,09) Future value =+FV(D16,D11,0,-09)

The PV is negative because initially you need to pay up the PV to achieve the desired FV so it is a cash outflow