Chapter 5, Problem 7 Student's Name:

Solution method uses FV and EXP functions/formulas

Guidelines: <-- To view guidelines, move mouse pointer over cell with red triangle. Red triangle identifies a c

Problem:
Multiple compounding periods: Find the future value of a five year $100,000 investment that pays 8.75 percent an
has the following compounding periods: a. Quarterly, b. Monthly, c. Daily, and d. Continuous.

Unknown:
Value of investment at the end of five years.

Assumption(s)
None

Given information/inputs/arguments: Values Comments

Annual interest rate Enter percentage as percent X.XX%, or decimal. .XXXX
Number of periods/years, nper Enter number of years
Compounding frequency a Enter quarters in a year
Compounding frequency b Enter months in a year
Compounding frequency c Enter days in a year
Compounding frequency d Compounded Continuously, to approximate enter 1,0
Annuity payment, pmt Ener zero, not an annuity problem
Present value, pv Ener initial investment as a positive value
Type of annuity Enter 0, not an annuity problem

Excel solution method using FV and EXP functions:

Excel FV function, quarterly compounding =
Excel FV function, monthly compounding =
Excel FV function, daily compounding =
Excel FV function, continuous compounding, 1,000,000 subperiods =
Excel FV function, continuous compounding, using formula =
 Date:

triangle. Red triangle identifies a cell comment.

nvestment that pays 8.75 percent and that

d. Continuous.

e as percent X.XX%, or decimal. .XXXX

ontinuously, to approximate enter 1,000,000

n annuity problem
tment as a positive value
nnuity problem