244
Topic Key Ideas, Formulas, and Techniques Examples
Spreadsheets as a
Mathematical Tool,
pp. 213–214- Spreadsheets can be set up with formulas to
automatically perform calculations based on
values that you enter.
A company has four employees
who earn different hourly rates.
Adam earns $12.75 per hour and
worked 20 hours, Betty $11.85 and
28, Carole $13.95 and 36, and Dario
$12.50 and 27.5. Use a spreadsheet
to calculate the gross pay for each
person and for the company as a
whole. (Example 5.1.1)Future Values with
Spreadsheets, p. 223- Spreadsheets can be used to fi nd the future
values of annuities, or of streams of irregular
payments. - Spreadsheets may be a more effi cient method
of doing this accurately and quickly than using
formulas. - Spreadsheets are especially effi cient to use if
the payments vary a lot.
Erika plans to deposit $2,000 this
year into her retirement account
and then increase her deposits by
4% per year. If her account earns
7.25%, how much will she have in
30 years? (Example 5.2.4)Amortization Tables with
Spreadsheets,
pp. 228–231- Spreadsheets can be used to build amortization
tables, making it easy to create a full.
amortization table for a loan without repetitive
calculations. - Amortization spreadsheets are an effective tool
for analyzing loans when the payments are
irregular.
Te d and Kristi owe $94,372.57
on their mortgage. Their monthly
payment is $845.76. If they pay
$7,000 extra right now, and $1,200
a month for the next 12 months,
and then go back to their regular
payment after that, how long
will it take to pay off their loan?
(Example 5.3.3)Solving for Time with
Spreadsheets,
pp. 235–236- Given a set of payments and an interest rate,
we can solve for the time required to reach a set
future value. - Use a future value spreadsheet, enter the
payments and rate, and then scroll down to see
when the future value is reached. - Amortization tables with spreadsheets can be
used to solve for time with present values.
Miyako has $47,593 in her
retirement account. She plans
to deposit $2,000 this year, and
increase her payments by 3% each
year. If her account earns 9%, how
long will it be before her balance
reaches $500,000? (Example 5.4.2)
Ted and Kristi’s mortgage (shown
above) is an example of solving for
time with present value.Solving for Interest Rates
with Spreadsheets,
pp. 236–237- Given a set of payments, period of time, and
future value, we can solve for the interest rate
required to achieve this result. - Enter the payments and then use educated
guesses for the interest rate until the
spreadsheet shows the desired future value at
the desired time. - Interest rates for present values can be solved
for similarly, using an amortization spreadsheet;
use educated guesses for the interest rate until
the balance is $0 at the desired time. - Goal Seek can be used as an alternative to
guess and check.
Bryce has $28,500 in his retirement
account and plans to contribute
$2,500 each year. He wants to
have $1,000,000 in his account
35 years from now. What interest
rate must he earn to reach his
goal? (Example 5.4.3)CHAPTER 5
SUMMARY