For this section, use workbook Time.xlsx. This section is slightly different in that you have to create the formulas in each worksheet and then answer additional questions. For full credit, I need to see the use of the function and formula features of Excel. You must use the appropriate function/formula to earn full credit and the answers must be in the highlighted cells with a surrounding border.
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Definitions
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Cash Flow: Earnings before depreciation, etc.
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Discount Rate: Interest rate
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Future Value: The value of an asset at a certain point in the future when its return is a known factor.
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Period: The time span in which certain financial events took place.
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Present Value: The current worth of a future sum of money or stream of cash flows given a specified rate of return
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Formulas
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Future Value
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Annuity Future Value: Equals (Payment) * (((1 + (Discount Rate/Period)) ^ (Number of Periods)) – 1) / (Discount Rate/Period)
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Future Value: Equals (Cash Flow) * ((1 + (Discount Rate/Period)) ^ ((Number of Periods) – (Current Period))
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Future Value of Each Cash Flow: Equals (Cash Flow) * ((1 + (Discount Rate/Period)) ^ ((Number of Periods) – (Current Period))
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Loan Amortization
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Beginning Principal Balance in Year T: Equals (Beginning Principal Balance in year t-1) – (Principal Component in year t-1)
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Interest Component in Year T: Equals (Interest rate/year) * (Beginning Principal Balance in year t)
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Principal Component in Year T: Equals (Payment) – (Interest component)
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Present Value
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Annuity Present Value: Equals (Payment) * (1 – ((1 + (Discount Rate/Period)) ^ (-Number of Periods))) / (Discount Rate/Period)
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Present Value: Equals (Cash Flow) / ((1 + (Discount Rate/Period)) ^ (Number of Periods))
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Present Value of Each Cash Flow: Equals (Cash Flow) / ((1 + (Discount Rate/Period)) ^ (Period))
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Future Value
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- A cash flow of $747.25 is available now (in Period 0). For this cash flow, the appropriate discount rate/period is 6.0%. What is the period 5 future value? Use worksheet “Single-FV”.
- An annuity pays $80.00 each period for 5 periods. For these cash flows, the appropriate discount rate/period is 6.0%. What is the period 5 future value? Use worksheet “Annuity-FV”.
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Present Value
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- A cash flow of $1,000.00 will be received in period 5. For this cash flow, the appropriate discount rate/period is 6.0%. What is the present value of this single cash flow? Use worksheet “Single-PV”.
- An annuity pays $80.00 each period for 5 periods. For these cash flows, the appropriate discount rate/period is 6.0%. What is the present value of this annuity? Use worksheet “Annuity-PV”.
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