Problem 1

If Mr. X borrows from his older sister for 3 years at 5% per year compound interest. How
much money will he repay at the end of 3 years?

Figure 1

STEP 1: Select function for finding the future worth of the given problem in excel is
=FV(rate,nper,pmt,[pv],[type])
rate – interest rate
nper – period (in years)
pmt – annuity amount
pv - present worth
STEP 2: Enter the values of (rate, nper.pmt, pv) from the given problem. (fig.1)

Figure 2
STEP 3: The Excel worksheet will calculate the value and show the result of the future
worth Rs 1157.63

Problem 2
How much money would you be willing to spend now in order to avoid spending Rs.500,
7years now? If the interest rate is 18 %.

Figure 3

STEP 1: Select function for finding the Present worth of the given problem in excel is
=PV(rate,nper,pmt,[fv],[type])
rate – interest rate
nper – period (in years)
pmt – annuity amount
fv - future worth

Figure 4
STEP 2: Enter the values of (rate, nper.pmt, pv) from the given problem. (fig.3)
STEP 3: The Excel worksheet will calculate the value and show the result of the Present
worth of Rs 156.96
.

Problem 3.
If a women deposits Rs. 600 now, Rs. 300 two years from now and Rs. 400 5 years from
now. How much will she have in her account 10 years from now. If the interest rate is 5%.

Figure 5

STEP 1: Select function for finding the future worth of the given problem in excel is

=FV(rate,nper,pmt,[pv],[type])
rate – interest rate
nper – period (in years)
pmt – annuity amount
pv - present worth

STEP 2: Enter the values of (rate,nper.pmt,pv ) from the given problem.(fig.5)

 Figure 6

STEP 3: The Excel worksheet will calculate the value and show the result of the future worth
Rs 1931.09
.

Problem 4
A couple plan to start saving money by depositing Rs. 500 into their savings account year
from now. They estimate that their deposit will increase by Rs. 100 per year for 9 years
thereafter. What would be the present worth of the investments if the interest rate is 5% per
year?

STEP 1: Select function for finding the future worth of the given problem in excel is

=NPV(rate,value1,[value],…)
rate – interest rate
value1 – period value (annuity+gradient)
 Figure 7

Figure 8

STEP 2: Enter the values of (rate,nper.pmt,pv ) from the given problem.(fig.7)

STEP 3: The Excel worksheet will calculate the value and show the result of the Present
worth of Rs 7026.07

.
Problem 5
From the cash flow diagram given, calculate the amount of money in 3 year that would be
equivalent to all the cash flows shown using an interest of 11% per year.

Figure 9

STEP 1(a): Select function for finding the future worth of the given problem in excel is
=FV(rate,nper,pmt,[pv],[type])
STEP 1(b): For finding the future worth from the Present worth in excel using the
=PV(rate,nper,pmt,[pv],[type])
rate – interest rate
nper – period (in years)
pmt – annuity amount
pv - present worth
fv - future worth

STEP 2: Enter the values of (rate,nper.pmt,pv ) from the given problem for present worth for
calculating the future worth at time period of third year from now..(fig.9)
 Figure 10

STEP 3: Enter the values of (rate,nper.pmt,pv ) from the given problem for present worth for
calculating the present at time period of third year from now.
STEP 4: The Excel worksheet will calculate the value and show the result of the future worth
Rs 29.06.

Problem 6
How long it will take for Rs. 1000 to double if the interest rate is 55 per year.

Figure 11

STEP 1: Select function for finding the future worth of the given problem in excel is

=NPER(rate,nper,pmt,[pv],[type])
rate – interest rate
nper – period (in years)
 pmt – annuity amount
pv - present worth

STEP 2: Enter the values of interest rate, Present worth and Future worth from the given
problem.(fig.11)
STEP 3: The Excel worksheet will calculate the value and show the result as period of
14.21 years.

Problem 7.
How much money would a man have in his account after 8 years, if he deposit Rs. 100 per
year for 8 years at an interest rate of 4%, starting 1 year from now.

Figure 12

STEP 1: Select function for finding the future worth of the given problem in excel is
=FV(rate,nper,pmt,[pv],[type])
rate – interest rate
nper – period (in years)
pmt – annuity amount
pv - present worth
STEP 2: Enter the values of (rate,nper.pmt,pv ) from the given problem.(fig.12)
 Figure 13

STEP 3: The Excel worksheet will calculate the value and show the result of the future worth
of Rs 1157.63.

Problem 8.

A company invested Rs. 2500 in a new air compressor 7 years ago. Annual income
from compressor was Rs. 750. During the first year Rs. 100 was spent on the
maintenance, this cost increased every year Rs.25. The company plans to sell the
compressor for salvage at the end of next year for Rs. 150.construct a cash flow
diagram for this equipment.

Figure 14
Problem 9.
A company invested Rs.100000 on May 1st and withdrew a total of Rs.106000
exactly one year later.
(a) compute the interest gained
(b) The interest rate investment

Figure 15

STEP 1: The Interest gained can be calculated by subtraction Amount (A) by

principal (P)
INTEREST = A-P
STEP 2: The default function for finding the rate of interest
=RATE (nper, pmt, PV, [fv], [type], and [guess])
nper – period (in years)
pmt – annuity amount
pv - present worth
fv – future worth
STEP 3: The Excel worksheet will calculate the value and show the result of the rate of
interest is 6%
Problem 10
Calculate the amount of money that must have been deposited by 1 year ago to have Rs.
1000 now at an interest rate of 5% per year. Calculated the interest earned (n=1) during this
period.

Figure 16

STEP 1: Select function for finding the Present worth of the given problem in excel is
=PV(rate,nper,pmt,[fv],[type])
rate – interest rate
nper – period (in years)
pmt – annuity amount
fv - future worth
STEP 2: Enter the values of (rate, nper.pmt, pv) from the given problem. (fig.16)
STEP 3: The Excel worksheet will calculate the value and show the result of the Present
worth of Rs 952.38
INTEREST GAINED = A-P
STEP 4: The interest gained can be calculated as Rs.47.62