Calculating Future Value
Tamera George explained :
I am trying to calculate the following
Find the future value of an investment of $5,000 made today for the
following
1,) 6.25 percent compounded semi-annually for twelve years
2.) 7.63 percent compounded quarterly for six years
3.) 8.9 percent compounded monthly for ten years
4.) 10 percent compounded daily for three years
5.) 8 percent compounded continuously for two years
I don't really want you to do the calculations for me, I need to know how to
do the calculations to find these various types of answers using Excel. If
you do work the problem please change the numbers so that I can follow what
you are doing but am not getting the answer from you on this specific
problem. I just am trying to learn how to do the calculations myself.
Thanks for the help!
I suppose the interest rates 6.25, 7.63, 8.9, 10 and 8 are effective
annual rates to be converted in effective infra-annual rates as
follows:
i2 = (1+0.0625)^(1/2)-1 FV = 5000(1+i2)^24
i4 = (1+0.0763)^(1/4)-1 FV = 5000(1+i4)^24
i12 = (1+0.089)^(1/12)-1 FV = 5000(1+i12)^120
i365 = (1+0.1)^(1/365)-1 FV = 5000(1+i365)^1095
and for the 5th case FV = 5000 e^(0.08*2)
These calculations may differ from the Excel's ones.
In fact Excel uses the standard US banking calculations which take into
account bank profits instead of mathematical principles.
Bruno
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