Q1

calculate the future value using direct excel formula

Future Value (multiple cash flows)

FV=sum(PV*(1+R)^n)
1
2
3
4
PV
900
800
700
600
Rate
8.00%
8.00%
8.00%
8.00%
Years
3
2
1
0
fv
1133.7408
933.12
756
600
Suppose that you have $100 to invest for a period of 5 years at an interest rate
Q2

of 10% per year. How much will you have accumulated at the end of this time

100.00
5.00
0.10
161.05

pv
n
Rate
fv

Q3

calculate the present value using direct excel formula

Present Value (multiple cash flows)

PV=sum(FV/(1+R)^n)
FV
Rate
Periods
PV

Q4

Q6

700
600
7.50%
7.50%
3
4
563.47 449.28

Suppose that you are planning to send your daughter to

n
fv
Rate

Q5

900
800
7.50%
7.50%
1
2
837.21 692.27

18
100000
8%

calculate the sum of present values of all the cash flows

2. Multiple cash flows

PV=sum(FV/(1+R)^n)

Example

FV
Rate
Periods
pv

800
12.00%
1
714.285714

0
450
650
12.00%
12.00%
12.00%
2
3
4
0 320.3011 413.0868

you are offered an investment that will pay you $1,000 per year for

annuity

1000

Years
Rate

10
9.00%
6,417.66

pv

Q7

Suppose that you have $1,250 today and you would like to know how long it
pv
rate
fv

Q8

$1,250
9%
2500

Now, suppose that you will be borrowing $1000 each year for 10 years a

calculate the annuity value using direct excel formula

Loan payments (annuity payments)

PMT=PV/(1-1/(1+R)^n)/R
PV
Rate
Periods

Q9

7000
8.75%
6

Now, suppose that you will be borrowing $1000 each year for 10
1000
10
9.00%

annuity

Years
Rate
$15,192.93

Q10

Suppose that you are planning to send your daughter to college in 18 years.
fv
yr
rate

100000
18
8%
INR 2,670.21

Q11
rate
nper
pv
fv
type

0%

$19,541.21

2*12
-450000
0
0

months

EMI
0
1
2
3

interest

principal

outstanding balance of loan

450000
19541.21
1500
18041.21 431958.8
19541.21 1439.863 18101.3474 413857.4
19541.21 1379.525 18161.6852 395695.8

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21
19541.21

1318.986
1258.245
1197.302
1136.156
1074.805
1013.251
951.4908
889.5251
827.3528
764.9733
702.3858
639.5897
576.5843
513.3689
449.9428
386.3052
322.4555
258.393
194.117
129.6267
64.92138

18222.2241
18282.9649
18343.9081
18405.0545
18466.4046
18527.9593
18589.7192
18651.6849
18713.8572
18776.2367
18838.8242
18901.6203
18964.6257
19027.8411
19091.2672
19154.9048
19218.7545
19282.817
19347.093
19411.5833
19476.2886

377473.5
359190.6
340846.7
322441.6
303975.2
285447.2
266857.5
248205.8
229492
210715.7
191876.9
172975.3
154010.7
134982.8
115891.6
96736.66
77517.91
58235.09
38888
19476.41
0.124137

0 each year for 10 years at a rate of 9%, and then paying back the loan immediate after receiving the last payment. How much would you

$19,476.29

months
0
1
2
3

EMI
interest
principal outstanding balance of loan
19,476.29
0 19,476.29 450,000.00
19,476.29 1435.079 18,041.21 =
19,476.29
19,476.29

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29
19,476.29

yment. How much would you have to repay?