USA: +1(669)289-8683 
Sign in
Purpose of Assignment (Excel Required)
The purpose of this assignment is to provide students an opportunity to practice and learn the time-value of money concepts covered.
Assignment Steps
Resources: Quantitative Techniques in Financial Valuation Problem Set Excel® Template
Read the instructions on the first tab.
Complete the twelve exercises located in the template and record your answers in the highlighted spaces.
Format your paper consistent with APA guidelines.
Instructions
| Instructions: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Week 5 Individual Assignment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Number of Questions – | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Points: 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. You have twelve problems – on each tab of this Excel file. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. Please show your work in the cells. Use Excel formulas instead of writing the values/answers directly in the cell. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The instructor will then know where you made a mistake and provide you valuable feedback and partial credit (if appropriate). |
Question 1
| Find the interest paid on a loan of $1,200 for three years at a simple interest rate of 5% per year. | |||||||
| How much money will you pay after three years? | |||||||
| Principal | |||||||
| Rate | |||||||
| Time | |||||||
| Simple Interest ( | SI | ||||||
| Maturity Value |
Question 2
| Find the maturity value of a loan of $1,750 for 28 months at 9.8% simple interest per year. |
| — Please make sure that the time periods for Time and Rate match. |
Question
3
| Find the simple interest rate of a loan of $5,000 that is made for three years and requires $1,762.50 in interest. |
Question
4
| A loan of $16,840 is borrowed at 9% simple interest and is |
| repaid with $4,167.90 interest. What is the duration of the loan? |
Question 5
| How much money is borrowed if the interest rate is 9.25% simple interest |
| and the loan is made for 3.5 years and has $904.88 interest? |
Question 6
| Find the ordinary and exact interest for a loan of $1000 at a 5% annual | |||||
| interest rate. The loan was made on March 15 and is due May 15. | |||||
| Loan date | |||||
| Loan Due Date | |||||
| Exact time | days | ||||
| Ordinary Simple Interest (SI) | Exact Simple Interest (SI) |
Question 7
| Find the bank discount and proceeds using ordinary interest for a loan to Michelle Anders for $7,200 | |||
| at 8.25% annual simple interest from August 8 to November 8. | |||
| Face Value (F) | |||
| Discount Rate (D) | |||
| Time Period (T) | years –> ‘Convert Exact time in days to years | ||
| Bank Discount (B) | |||
| Proceeds (P) |
Question 8
| What is the effective interest rate of a simple discount note for | $8,000 |
| at an ordinary bank discount rate of 11%, for 120 days? |
Question 9
| SOLVED EXAMPLE | |||||||||||||
| What is the effective interest rate for the first year for a loan of | $20,000 | ||||||||||||
| for three years if the interest is compounded | quarterly | ||||||||||||
| Quoted Rate | 12.00% | ||||||||||||
| No. of compounding periods per year | For Quarterly, type 4; for semiannually, type 2; for annually, type 1; for monthly, type 12; for daily, type | 36 | |||||||||||
| EAR | 12.55% | ||||||||||||
| 1. Ross Land has a loan of $8,500 compounded quarterly for four years at 6%. What is the effective interest rate for the first year for the loan? | |||||||||||||
| For Quarterly, type 4; for semiannually, type 2; for annually, type 1; for monthly, type 12; for daily, type 365 | |||||||||||||
| 2. Find the effective interest rate for the first year for a loan for four years compounded semiannually at an annual rate of 2% | |||||||||||||
| 3. What is the effective interest rate for the first year for a loan of $5,000 at 10% compounded daily for three years? | |||||||||||||
| 4. Depending on the issuer, a typical credit card agreement quotes an interest rate of 18 percent APR. | Monthly | ||||||||||||
| What is the actual interest rate you pay on such a credit card? | |||||||||||||
| =EFFECT(B30, B31) | |||||||||||||
| 5. Find the effective interest rate for a loan of $3,500 at 10% interest compounded quarterly. | |||||||||||||
| =EFFECT(B36, B37) |
Question 10
| Tim Bowling has $20,000 invested for three years at a | 5.25% | |||||||||
| How much interest will he earn? | ||||||||||
| Initial Investment (PV) | ||||||||||
| Compounding Frequency | Daily | Choose one | ||||||||
| Number of compoundings (m) | ||||||||||
| Quoted Rate divided by m = RATE | 0.0144% | |||||||||
| Number of Years | ||||||||||
| NPER (Num. of years * m) | 1095 | |||||||||
| Ending Amount (FV) | $23,411.35 | |||||||||
| Compound Interest | $3,411.35 | |||||||||
| Exercise | ||||||||||
| Find the future value of a $15,000 money market investment at 2.8% annual interest compounded daily for three years. | ||||||||||
Question 11
| The Holiday Boutique would like to put away some of the holiday | |||
| profits to save for a planned expansion. A total of $8,000 is needed in three years. How much | |||
| money in a | 5.2% | ||
| now to have the $8,000 in three years? | |||
| Future Value Needed (FV) | |||
| 0.4333% | |||
| Amount Invested Now (PV) | $6,846.78 | ||
| How much should be invested now to have $15,000 in six years if interest is 4% compounded quarterly? | |||
Question 12
| Jamie Juarez needs $12,000 in 10 years for her daughter’s college education. |
| How much must be invested today at 2% annual interest compounded |
| semiannually to have the needed funds? |
| A loan of $8,000 for two acres of woodland is compounded quarterly at an annual |
| rate of 6% for five years. Find the compound amount and the compound interest. |
