Instructions: Use Excel and the Chapter 5 Excel resource found at the end of each chapter of the textbook (if needed).
Please show all work for each problem. Formatting for presentation of numbers and use of formulas should be clear, succinct, and properly labeled.
P5–3 Future value You have $100 to invest. If you put the money into an account earning 5% interest compounded annually, how much money will you have in 10 years? How much money will you have in 10 years if the account pays 5% simP5–3 Future value You have $100 to invest. If you put the money into an account earning 5% interest compounded annually, how much money will you have in 10 years? How much money will you have in 10 years if the account pays 5% simple interest?ple interest?
P5–5 Time value You have $1,500 to invest today at 7% interest compounded annually.a. Find how much you will have accumulated in the account after (1) 3 years, (2) 6 years, and (3) 9 years.b. Use your findings in part a to calculate the amount of interest earned in (1) the first 3 years (years 1 to 3), (2) the second 3 years (years 4 to 6), and (3) the third 3 years (years 7 to 9).c. Compare and contrast your findings in part b. Explain why the amount of inter-est earned increases in each succeeding 3-year period.
P5–12 Present value concept Answer each of the following questions.a. How much money would you have to invest today to accumulate $6,000 after 6 years if the rate of return on your investment is 12%?b. What is the present value of $6,000 that you will receive after 6 years if the dis-count rate is 12%?c. What is the most you would spend today for an investment that will pay $6,000 in 6 years if your opportunity cost is 12%?d. Compare, contrast, and discuss your findings in parts a through c.
P5–13 Time value Jim Nance has been offered an investment that will pay him $500 three years from today.a. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today?b. What is the most he should pay to purchase this investment today?c. If Jim can purchase this investment for less than the amount calculated in part a, what does that imply about the rate of return he will earn on the investment?
P5–48 Loan amortization schedule Joan Messineo borrowed $45,000 at a 4% annual rate of interest that she must repay over 3 years. The loan is amortized into three equal, end-of-year payments.a. Calculate the end-of-year loan payment.b. Prepare a loan amortization schedule showing the interest and principal break-down of each of the three loan payments.c. Explain why the interest portion of each payment declines with the passage of time.