Q: If you put Rs.

10,000 in bank at annual interest rate of 6%, compounded monthly, how

much will you have in 10 years?

Variables Excel
Variables generally used uses
Future Value FV FV
Present Value PV PV
Annual Interest Rate i
Number of compounding
periods per year n
Years x
Period Rate i/n rate
Total Number of Periods x*n nper or npery
FV = PV*(1+i/n)^((x*n)
FV(rate,nper,pmt,[pv],[type])

Total Interest
ompounded monthly, how

Numbers and
Formulas
?
10000
0.06

12
10
0.01
120
$18,193.97
$18,193.97

$8,193.97
 If we invest $100,000.00 with an annual rate of 7.00% compounded 12
times a year for 10 years; what is the future value of the investment?
Present Value = PV 100,000.00

Annual Interest Rate = i 7.00%

Number of Compoundin Periods per Year = n 12

Years = x 10

Future Value = FV (Start Calculation )

Period Rate = i/n 0.01

Total Periods = n*x 120
(1 + i/n)^(n*x) ###
Future Value = FV $200,966.14
Future Value = FV 200,966.14
Future Value = FV

Total Interest earned = cash put in - cash taken out $100,966.14

Calculation )
 How much would we have to invest today; if we want to have
$1,000,000.00 in 40 years and we could earn an annual interest rate
(discount rate) of 10.00% compounded 12 times a year?
Present Value = PV
"Annual Interest Rate" = Discount Rate (term used when
doing PV calculations) = i 10.00%
Number of Compoundin Periods per Year = n 12
Years = x 40
Future Value = FV 1,000,000.00
Period Payment = PMT
Period Rate = i/n
Total Periods = n*x
(1 + i/n)^(n*x)
Present Value = PV (18,621.74)
Present Value = PV
Present Value = PV
Total Interest earned = cash put in - cash taken out
P
 Err:508
Present Value = PV
"Annual Interest Rate" = Discount Rate (term used when doing PV
calculations) = i 6.95%
Number of Compoundin Periods per Year = n 365
Years = x 18
Future Value = FV 150,000.00
Period Payment = PMT
Period Rate = i/n
Total Periods = n*x
(1 + i/n)^(n*x) ###
Present Value = PV (42,937.88)
Present Value = PV 42,937.88
Present Value = PV
Total Interest earned = cash put in - cash taken out
 If you want to buy a $350,000.00 C & C Router Machine to improve manufacturing efficiency
and you have $200,000.00 today that you can invest at an annual rate of 8.50% compounded
12 times a year; how long do you have to wait (be careful about what period you need to make
the calculation and what period you need for the answer) until you can afford the machine?
(Assume the $350,000.00 is the price in the future).
PV 200,000.00
i 8.50%
n 12
FV 350,000.00
x*n 79.28 months
x/n 6.61 years
 cturing efficiency
50% compounded
you need to make
ord the machine?
 If you want to buy a $350,000.00 C & C Router Machine to improve manufacturing
efficiency and you can invest $250,000.00 today for the next 5 years (compounding 2
times a year); what annual interest rate (APR) do you need to find (be careful about
periods) so that you can afford the machine? (Assume the $350,000.00 is the price in
the future).
PV 250,000.00
n 2
x 5
FV 350,000.00
i/n 3.42%
i 6.84%
 If we want to withdraw $50.00 at the end of each year (these are cash flows in the
future); for the next 3 years; how much do we have to deposit in the bank today
(Present Value) if the APR is 12.00% compounded 1 time a year?
PMT = 50
i= 0.12 Annual Interest Rate = Discount Rate
n= 1
x= 3 i/n 0.12
PV = $120.09 x*n 3
Period rate
Total Periods
 If your investment plan requires that you deposit $100.00 at the beginning of each period for
the next 40 years and you can earn 12.00% compounded 12 time a year; what is the Future
Value?
APR = i = 0.12
n= 12
x= 40
Equal Payments Made At Equal
Time Intervals = PMT = 100

0 or Blank for Ordinary Annuity,

or, 1 for Annuity Due

FV = PMT*((1+i/n)^(x*n)-1)/
(i/n)*(1+i/n) =

FV = FV(i/n,n*x,PMT,,0 or 1) = $1,176,477.25 $1,176,358.60

Total Paid in =

Total Interest Earned =

Difference between Ordinary
and Due =
beginning of each period for
e a year; what is the Future
 Savings Plan for Daughter's college:
How much would we have to invest today; if we want
to have $180,000.00 (for our daughter's college
tuition) in 18 years and we could earn an 8% interest
rate compounded monthly?
FV = 180,000.00
APR = i = 0.0800
n= 12
x= 18
i/n =
n*x
Ordinary = 0 or blank, Due = 1
PMT = $374.93
 Q: How much do you have to have in the bank when you retire if you want to withdraw -
$3,000.00 at the end of each period for the next 35 years and you can earn 6.00%
compounded 12 times a year?
PMT = 3000
i = APR (or Discount Rate) 0.06
n= 12
x= 35
PV = $526,140.68

Q: If you need $526,140.68 when you retire; how much do you need to invest each period if
you are 28 and you plan to retire when you are 70 (i = 10.00%; n = 12).
FV = $526,140.68
i= 0.1
n= 12
Age now = 28
Age when you retire = 70
x= 42
PMT = $67.94
Total Paid out = 34,241.32
Total Received =
Total Interest Received = (34,241.32)
 you want to withdraw -
you can earn 6.00%

ed to invest each period if

0.00%; n = 12).