226 Chapter 2 Evaluating Projected Cash Flows
- This question is based on Exercise 1. How much interest will Khalil earn in the 20th year? How much interest will he
earn in the 37th year? How much total interest will he earn? - This question is based on Exercise 2. How much interest will Cristina earn in the (a) 10th year, (b) 20th year, (c) 30th
year, (d) 40th year, (e) 50th year? - Suppose that Traci deposits $100 each month into an account earning 7½% (compounded monthly). Set up a
spreadsheet to illustrate the growth of her account over 20 years. According to this spreadsheet, how much will she
have in her account in 20 years? - Suppose that Valeriy deposits $20 every other week into an account earning 9.15% (compounded biweekly). Set up a
spreadsheet to illustrate the growth of his account. How much will he have in his account after 32 years?
B. Finding Future Values with Changing Payments
- Wally is planning to deposit $2,350 each year into an account in which he expects to earn 7%.
a. Use a spreadsheet to determine his account value based on these assumptions after 30 years.
b. Suppose that after 10 years, Wally decides to increase his deposit to $3,000 per year. What would his account
value be after 30 years?
c. Suppose that in addition to what we assumed in part b, Wally already had $11,046.19 in this account. What would
his account value be after 30 years?- a. Find the future value of an annuity of $1,750 per year for 20 years, assuming a 6.75% interest rate.
b. Suppose that instead of $1,750 per year, the deposits were $1,750 per year for the fi rst 5 years, $2,000 per year
for the next 7, and then $2,700 per year for the last 8. What would the future value be then?- Suppose I have $34,072.16 in a retirement account right now, and I think that the account will earn 9.25%. I plan to
deposit $3,000 into my account this year, and then increase my payments by 3% every year. For these assumptions, how
much will I have in my account 25 years from now? - Lindsey is going to deposit $2,000 this year into an account paying 8%. In the future, she plans to increase her annual
deposits by $250 each year, so that next year she will deposit $2,250, the following year she will deposit $2,500, and so
on. Assuming she keeps this up, how much will she have in her account in 30 years? How much will she have deposited
in total? How much total interest will she have earned?
C. Finding Future Values with Different Interest Rates
- Fay deposits $50 each month into an investment account. Assuming she keeps this up, fi nd her future value in 25 years
if her account earns (a) 6.45%, (b) 8.25%, (c) 9%, (d) 10.75%, (e) 12½%. (Note: Use a spreadsheet; do not fi nd these
future values by using the annuity formulas!)
226 Chapter 5 Spreadsheets