School

John Brown Univeristy **We aren't endorsed by this school

Course

FIN MISC

Subject

Finance

Date

Nov 7, 2023

Pages

36

Uploaded by DeanExploration7479 on coursehero.com

by Brad Jordan and Joe Smolira
Version 10.0
Chapter 4
In these spreadsheets, you will learn how to use the follow
The following conventions are used in these spreadsheets:
1) Given data in blue
2) Calculations in red
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-In" be installed in Excel.
To install these, click on the File button
then "Options," "Add-Ins" and select
"Go." Check "Analysis ToolPak" and
"Solver Add-In," then click "OK."
Ross, Westerfield, and Jordan's
Excel Master
Essentials of Corporate Finance
, 10th edition
FV
PV
Two-way data tables
RATE
NPER
FVSCHEDULE

wing Excel functions:
:

Chapter 4 - Section 1
Future Value and Compounding
Excel contains numerous financial functions, many of which relate to the time value of mo
Example 4.1: Interest on Interest
Suppose you have the following investment opportunity for two years:
Interest rate per year:
14.0%
Initial investment:
$
325
How much will you have at the end of the investment? How much is simple interest?
At the end of one year, you will have:
$
370.50
At the end of the investment you will have:
$
422.37
The total interest earned is:
$
97.37
Interest on original investment per year:
$
45.50
Total simple interest:
$
91.00
Total compound interest:
$
6.37
Initial investment:
$100
Interest rate per year:
10%
Year
1
$
100.00 $
10.00 $
0.00 $
10.00
2
110.00
10.00
1.00
11.00
3
121.00
10.00
2.10
12.10
4
133.10
10.00
3.31
13.31
5
146.41
10.00
4.64
14.64
Totals
$
50.00 $
11.05 $
61.05
As shown in the textbook, the future value of $1 is found by the equation FV = $1
´
(1 +
r
What is the value of the investment each year over the next 5 years? How much of the int
question with the following table:
Beginning
Amount
Simple
Interest
Compound
Interest
Total
Interest

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