# I don’t understand, Answer the following in an Excel file. problems must be using the PV and FV functions in Excel

Answer the following in an Excel file. problems must be using the PV and FV functions in Excel.  Should be able to see the formulas in the “bar” at the top of the spreadsheet.

Compound Interest, PV & FV

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1)   If I deposit \$11,000 in a bank account that pays interest of 2%, compounded annually, how much will I have in the account after 10 years?

2)   If I deposit \$11,000 in a bank account that pays simple interest of 2%, how much will I have in the account after 10 years?

3)   How would you explain the difference in the answers to the previous two problems, given that both banks pay interest at the same rate?  Be specific.

4)   If you deposited \$775 at 12% interest, what would you end up with at the end of 12 years if it was compounded annually?

5)   What would the present value be of \$1,000 to be received 8 years from now discounted back at 3%?

6)   Craig, who recently sold his Porsche, placed \$10,000 in a savings account paying annual compound interest of 6%

a)    Calculate the amount of money that will have accrued if he leaves the money in the bank for 1, 5 and 15 years.

b)   Calculate the amount of money that will have accrued if the interest rate changed to 7.5% and paid only simple interest for 1, 5 and 15 years.

c)    After your calculations did compound or simple interest gain more money in years 1, 5, 15?

7)   Nolan Arenado hit 37 homeruns for the Colorado Rockies in 2017. If his homerun output grew at a rate of 12% per year, what would it be over each of the following 5 years?

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