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Consider using "Split" panes to assist in copy and paste of data. Much of the exercises and problems can have data entered by the "look to" or "=A34" type formula where cell A34 contains the data to be entered. This precludes typing and data entry errors.
Using the appropriate interest table or Excel formula or financial calculator, provide the solution to each of the following questions. Place your answer and your explanation of how it was derived in the space provided in order to receive full credit. For your explanation provide either a formula similar to the textbook approach or an excel formula or provide the keys your pressed on the financial calculator.
1 How much should Elton John invest at the end of each year for six years if he expects to earn 8 % and he wants to accumulate $150,000 for a new grand piano six years from today. Answer: Explanation: $ 20,447
2 How much should Elton John invest today if he expects to earn 8 % and he wants to accumulate $150,000 for a new grand piano six years from today. Answer: Explanation: $ 94,525
3 How much much Elton John invest today if he expects to earn 8 % compounded semiannually and he wants to accumulate $150,000 for a new grand piano six years from today. Answer: Explanation: $ 7,904
4 Frances is depositing $4,095 at the end of each year in a fund that earns 10%. In how many years will the fund be at $25,000? Answer: Explanation: 19 I divided 25,000/4095 and got 6.1050. Used Table 6-1 and looked it up under the 10% column.
5 Nancy is investing $300,000 in a fund that earns 6% interest compounded annually. What equal amount can Nancy withdraw at the end of each of the next 7 years? Answer: Explanation:
6 Vagabond, Inc. issues $800,000 of 9% bonds due in 20 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 8%. What amount will Vagabond receive when it issues the bonds. Answer: Explanation:
7 Elizabeth Taylor will receive $200,000 five years from now from a trust fund established by one of her many husbands. Assuming the appropriate interest rate for discounting is 8 percent compounded quarterly, what is the present value of this amount today? Answer: Explanation: 200,000=R (1+.08)20 - 1 200,000= R(3.66095714) 200,000/3.66095714= R R=$ 54630.52