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    C4 Class Problems-Excel (Answers)

    Uploaded by

    ArjhiePalaganasDioquino

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    © All Rights Reserved
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    C4 Class Problems-Excel (Answers)

    Uploaded by

    ArjhiePalaganasDioquino
    33 views81 pages

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    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    33 views81 pages

    C4 Class Problems-Excel (Answers)

    Uploaded by

    ArjhiePalaganasDioquino

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    You are on page 1of 81

    Year 0 1 2 3 4

    Payment

    Interest

    Borrow amount
    Year 0 1 2 3 4
    Payment $ 5,000.00 $ 8,000.00 $ 8,000.00 $ 8,000.00
    Method 1 4716.981132 7119.97152 6716.95426 6336.74931 24890.66
    Interest 6%
    Method 2
    Borrow amount $24,890.66

    Year 0 1 2 3 4
    Payment $ 5,000.00 $ 8,000.00 $ 8,000.00 $ 8,000.00
    Total
    FV in Yr 4 5955.08 8988.8 8480 $ 8,000.00 31423.88
    Year 0 1 2 3 4

    Amounts being paid back

    Interest Annual

    Amount You Can Borrow


    5 6
    Year 0 1 2 3 4 5

    Amounts being paid back $ - $ 70.00 $ 85.00 $ 85.00 $ 90.00 $ 90.00


    Method 1 $ 69.65 $ 84.16 $ 83.74 $ 88.22 $ 87.78
    Interest Annual 0.5%
    Interest Monthly 0.04%
    Amount You Can Borrow $ 500.90
    (Present Value)
    Solve for FV:
    N 6
    i 0.5%
    PV $ 500.90
    pmt 0
    FV $516.11
    6

    $ 90.00
    $ 87.35 $ 500.90
    Pmt Payments $ 1,000.00
    i Interest rate 10%
    N Number of Years 3

    PV Present Value ($2,735.54)

    FV Future Value ($3,641.00)


    Payments 1000
    Interest rate 0.1
    Number of Years 3

    Present Value ($2,735.54)

    Future Value ($3,641.00)


    Payments
    Interest rate
    Number of Years

    Present Value

    Future Value
    Payments 1000
    Interest rate 0.06
    Number of Years 3

    Method #1
    Present Value ($2,833.39)

    Future Value ($3,374.62)

    Method #2
    PV ($2,833.39) * (1+.06)^3
    FV -3374.616

    N 3
    i 0.06
    PV ($2,833.39)
    Pmt 0
    FV $3,374.62
    How to Solve a Perpetuity

    C (pmt) = amount needed


    r = interest rate

    PV
    How to Solve a Perpetuity

    C (Pmt) = amount ne $ 30,000.00


    r = interest rate 8%

    PV $ 375,000.00
    PV

    r = interest rate

    Solve for C (Pmt)


    C (Pmt) = amount needed
    PV $ 4,000,000.00

    r = interest rate 5%

    Solve for C (Pmt)


    C (Pmt) = amount needed $ 200,000.00
    Year Payments
    0 Interest Rate 0.08
    1
    2 A) Present Value of
    3 Payments
    4
    5
    6 B) Lump Sum Today
    7
    8
    9
    10
    11 Which option should you choose?
    12
    13
    14
    15
    16
    17
    18
    19
    20
    21
    22
    23
    24
    25
    26
    27
    28
    29
    30
    PV of cash flows
    $ 15,000,000
    Year Payments

    0 1000000

    1 1000000 Interest Rate 0.08


    2 1000000
    3 1000000

    A) Present Value of
    4 1000000 Payments ($12,158,406.01)
    5 1000000
    6 1000000
    7 1000000 B) Lump Sum Today $ 15,000,000.00
    8 1000000
    9 1000000 Which option should you choose?
    10 1000000
    11 1000000 B
    12 1000000
    13 1000000

    14 1000000
    15 1000000
    16 1000000
    17 1000000
    18 1000000
    19 1000000
    20 1000000
    21 1000000
    22 1000000
    23 1000000
    24 1000000
    25 1000000
    26 1000000
    27 1000000
    28 1000000
    29 1000000
    30

    PV of cash flows
    $12,158,406.01
    PV of cash payments Payments 10000
    $ 57,665.00 Interest rate 7.0%
    Number of Years 7
    PV of BMW
    $ 61,000.00 Present Value ($57,665.40)

    Choose BMW Future Value-Pmts ($92,598.03)

    Future Value-BMW ($97,952.67)


    N
    i
    PMT
    PV
    FV
    N 30
    i 0.1
    PMT 0
    PV -10000
    FV $1,644,940.23
    At Age 45:
    N
    i
    PMT
    PV
    FV

    At Age 65:
    N
    i
    PMT
    PV
    FV
    At Age 45:
    N 20
    i 0.1
    PMT -10000
    PV 0
    FV $572,749.99

    At Age 65:
    N 20
    i 0.1
    PMT 0
    PV -572750
    FV $3,853,175.60
    Formula PV = C/(r-g)

    C
    r
    g

    PV
    Formula PV = C/(r-g)

    C $ 30,000.00
    r 8%
    g 4%

    PV $ 750,000.00
    Original Problem 4-3a answer

    PV

    r = interest rate 5%

    Solve for C (Pmt)


    C (Pmt) = amount needed $ -

    Adjustment due to Inflation (2% increase in salary annually)

    Rate of
    Salary
    Increase

    C (Pmt) = PV * (r - g)

    C
    Original Problem 4-3a answer

    PV $ 4,000,000.00

    r = interest rate 5%

    Solve for C (Pmt)


    C (Pmt) = amount needed $ 200,000.00

    Adjustment due to Inflation (2% increase in salary annually)


    Rate of
    Salary
    Increase 2%

    C (Pmt) = PV * (r - g)

    C $ 120,000.00
    Year Amount Find PV of Cashflows
    1
    2 Interest Rate ®
    3
    4 Growth Rate (g)
    5
    6 PV of Cash flows
    7
    8 FV of PV
    9
    10 N
    11 i
    12 PMT
    13 PV
    14 FV
    15
    16
    17
    18
    19
    20
    21
    22
    23
    24
    25
    26
    27
    28
    29
    30
    Find PV of Cashflows

    Interest Rate ® 10%


    Year Amount
    1 10000 Growth Rate (g) 5%
    2 10500
    3 11025 PV of Cash flows $ 150,463.15
    4 11576.25
    5 12155.063 FV of PV
    6 12762.816
    7 13400.956 N 30
    8 14071 i 0.1
    9 14774.554 PMT 0
    10 15513.282 PV $ (150,463.15)
    11 16288.946 FV $2,625,491.98
    12 17103.394
    13 17958.563
    14 18856.491
    15 19799.316
    16 20789.282
    17 21828.746
    18 22920.183
    19 24066.192
    20 25269.502
    21 26532.977
    22 27859.626
    23 29252.607
    24 30715.238
    25 32251
    26 33863.549
    27 35556.727
    28 37334.563
    29 39201.291
    30
    Find PV of Cashflows

    Interest Rate ®

    Growth Rate (g)

    Intital Payment

    PV of Cash flows

    FV of PV

    N
    i
    PMT
    PV
    FV
    Find PV of Cashflows

    Interest Rate ® 10%

    Growth Rate (g) 4%

    Intital Payment $ 10,000.00

    PV of Cash flows $ 112,383.92

    FV of PV

    N 40
    i 0.1
    PMT 0
    PV $ (112,383.92)
    FV $5,086,412.46
    Solve for Pmt

    N
    i
    PMT
    PV
    FV
    Solve for Pmt

    N 30
    i 8%
    PMT $7,106.19
    PV $ (80,000.00)
    FV $0.00
    Solve for Loan Amount
    Down Payment
    % of Purchase Price
    or Value

    Value
    less: Down Payment
    Loan Amount (PV)

    Solve for Pmt (monthly)

    N
    i
    PMT
    PV
    FV
    Solve for Loan Amount
    Down Payment $ 50,000

    % of Purchase Price or Value 20%

    Value $ 250,000
    less: Down Payment $ (50,000)
    Loan Amount (PV) $ 200,000

    Solve for Pmt (monthly)

    N 360
    i 1%
    PMT $1,199.10
    PV $ (200,000.00)
    FV $0.00

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