Excel Companion Chapter 3 section 7

Excel Companion Chapter 3 Section 7
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Financial Calculator 2	*TVM2.xls*

To solve annuity problems with FINCALC from TVM2.xls (shown below), you must remember to first enter an x in the upper blue box. A second x should be entered further down to identify the unknown quantity. For standard problems that involve the future value of an annuity, such as sinking funds, you must enter a 0 in PV. Similarly, for standard problems that involve the present value of an annuity, such as mortgages, you must enter a 0 in FV. An annuity due differs from an ordinary annuity in that payments are made at the beginning of each period rather than at the end of the period.

TVM2.xls - FINCALC

QUESTIONS:

	Suppose you are solving a sinking fund problem where the unknown is the interest rate and you make 10 payments of $15,000 to build up to $200,000. You enter 10 for N, x for %i, 15000 for PMT, 0 for PV, and 200000 for FV
1.	What is the rate if payments are made at the end of the period?
2.	What is the rate if payments are made at the beginning of the period?
3.	Suppose that you inadvertently leave out one of the zeros and type 20000 instead of 200000 for FV. How would you explain the result reported by FINCALC?

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