Question

BIOWEE® TITTEEB Nex ent/d/160AWUQsqylexlusOJV4AG6MjhDAK9jN1RJLUWRhXSc/edit 3. An investment offers $5,500 per year for 15 years, with the first payment occurring one year from today. If the required return is 6%, what is the present value of the investment? Show your work. 4. If you deposit $4,000 at the end of each year for each of the next 20 years into your account which pays 9.7% interest, how muc

Answer 1

Here you go with the solution:

In ques 3, PV is calculated : Amount*Discounting Factor (Rate of Return-6%)

Discounting Factor calculated like as follows:

=ROUND(1/1.06^1,5)

In ques 4, FV is calculated : Amount*Compounding Factor (Rate of Return-9.7%)

Cmpounding Factor calculated like as follows:

=ROUND(1.097^19,5)

3	Year	Amount ($)	Rate of Return @6%	Present Value Amount ($)
	1	5500	0.94340	5,188.70
	2	5500	0.89000	4,895.00
	3	5500	0.83962	4,617.91
	4	5500	0.79209	4,356.50
	5	5500	0.74726	4,109.93
	6	5500	0.70496	3,877.28
	7	5500	0.66506	3,657.83
	8	5500	0.62741	3,450.76
	9	5500	0.59190	3,255.45
	10	5500	0.55839	3,071.15
	11	5500	0.52679	2,897.35
	12	5500	0.49697	2,733.34
	13	5500	0.46884	2,578.62
	14	5500	0.44230	2,432.65
	15	5500	0.41727	2,294.99
	Total			53,417.43
4	Year	Amount ($)	Rate of Return @9.7%	Future Value Amount ($)
	1	4000	5.80665	23,226.60
	2	4000	5.29321	21,172.84
	3	4000	4.82517	19,300.68
	4	4000	4.39851	17,594.04
	5	4000	4.00958	16,038.32
	6	4000	3.65505	14,620.20
	7	4000	3.33186	13,327.44
	8	4000	3.03724	12,148.96
	9	4000	2.76868	11,074.72
	10	4000	2.52387	10,095.48
	11	4000	2.30070	9,202.80
	12	4000	2.09726	8,389.04
	13	4000	1.91182	7,647.28
	14	4000	1.74277	6,971.08
	15	4000	1.58867	6,354.68
	16	4000	1.44819	5,792.76
	17	4000	1.32014	5,280.56
	18	4000	1.20341	4,813.64
	19	4000	1.09700	4,388.00
	20	4000	1.00000	4,000.00
	Total			2,21,439.12