I=(amount borrowed*rate per year*time span)
You will be using the Future Value function.
=fv(rate,nper,pmt,pv,type)
I assume we are treating Les investment only, not Audrey; and the lumpsum gets paid interest at the end of each year.
Rate expressed as .075 and divided 12 if paid monthly.
nper is number of payments per year - 12 for first and 1 for second, the *3 for the three yrs.
Pv present value, 0 is first case 5000 in second.
type, 0 paid at end of period.
My answer $32075
Now Audreys situation needs to use PMT function to determin what her regular payment per month needs to be, 319.85.
Important note these function are designed for loans, to apply them to investment enter the function as a minus ie =-PMT(...
Im Currently in the process of teaching myself various finance calculations using excel ( including functions ) to conduct my calculations - However i've come across a question i quite simply cant get my head around :
Les and Audrey (name changes protect the innocent) are happily married, and are both in business, Les running an accordion factory and Audrey operating a millinery service. They are keen that their businesses do not take over at
home; in particular, Audrey has a deep dislike of everything to do with accordions.
Some years ago, their financial adviser, Andy, recommended that they increased their investments over the course of the next three years, with a view to obtaining and fitting-out suitable business premises.
Les immediately started investing ￡670 per month at an annual equivalent interest rate of 5.7% pa.
At the same time he also invested a lump sum of ￡5,000 at 5.3%pa.
Audrey decided to make a regular monthly investment at 0.52% per month, starting from the end of the month, and continuing for three years. Andy, knowing that Audrey would require something in the region of ￡32,000, was able to advise her of a suitable amount to invest.
And the question is -
To the nearest pound how much will Les have accumulated at the end of three years?
Thank you very much !
I dont understand if I'm working out the monthly interest then calculating per month, or just adding a years worth of investments and simply calculating the interest percentage.
