# If you wish to have \$60,000 in 8 years, how much do you need to deposit in the bank today if the account pays an interest rate of 9%?

## Wk 3 – Set 1, Part 1

 Week 3 Financial Exercises Problem Set 1, Part 1 Complete the following problems using either the financial functions in Excel or the Present Value and Future Value formulas as noted below: PV = FV * 1 / (1+i)^n FV = PV * (1+i)^n (1) If you wish to have \$60,000 in 8 years, how much do you need to deposit in the bank today if the account pays an interest rate of 9%? Answer: (2) What will \$110,000 grow to be in 9 years if it is invested today at 11%? Answer: (3) You would like to have \$200,000 in a college fund in 15 years. How much do you need today if you expect to earn 12% while you are investing to pay for your child’s college? Answer: (4) You have been offered \$3,000 in 4 years for providing \$2,000 today into a business venture with a friend. If interest rates are 10%, is this a good investment for you? Answer: (5) What will \$82,000 grow to be in 11 years if it is invested today at 8% and the interest rate is compounded monthly? Answer: (6) How many years will it take for \$136,000 to grow to \$468,000 if it is invested in an account with an annual interest rate of 8% Answer: (7) At what interest rate must \$112,000 be invested so that it will be worth \$392,000 in 14 years? Answer:

&”Arial,Regular”&10 Wk 2 Financial Exercises – Part 1 HCS/385 v4 Page &P of &N

&”Arial,Regular”&10HCS/385 v4

## Wk 3 – Set 1, Part 2

&”Arial,Regular”&10Wk 2 Financial Exercises – Part 2 HCS/385 v4 Page &P of &N

&”Arial,Regular”&10HCS/385 v4

## Wk 3 – Set 2, Part 1

 Week 3 Financial Exercises Problem Set 2, Part 1 Using the table below, describe the types of budgets. In your description, include: • The objective of the budget • How the budget assists an organization in managing its financial activities • What types of data need to be included in that specific budget Type of Budget Description Cash Flow Operating Sales Static Financial

## Wk 3 – Set 2, Part 2

 Week 3 Financial Exercises Problem Set 2, Part 2 Complete the following problems using the following ratios: Sales level at which operating income is zero o    If sales above breakeven, then profit o    If sales below breakeven, then loss o    Fixed expenses = total contribution margin Total sales = total expenses Break Even Point: Unit Sold = Fixed expenses + Operating Income / Contribution Margin per unit Break Even Point: Sales \$ = Fixed expenses + Operating Income / Contribution Margin Ratio (1) Calculate the break even number of units if the fixed expenses are \$7,000 and the contribution margin is \$14 per unit. Answer: (2) Calculate the break even sales dollars if the fixed expenses are \$7,000 and the contribution ratio is 40%. Answer: (3) Calculate the break even number of units with a target profit of \$120,000 if the fixed expenses are \$15,000 and the contribution margin is \$60 per unit. Answer:

## Wk 3 – Set 2, Part 3

 Week 3 Financial Exercises Problem Set 2, Part 3 Complete the following problems: (1) How much will you have saved after 6 years by contributing \$1,200 at the end of each year if you expect to earn 11% on the investment? Answer: (2) A business owner plans to deposit his annual profits in an investment account earning a 9% annual return. If the owner starts with their first deposit today for \$22,000 and expects to make the same profit for the next 7 years, how much will be saved for retirement at that point? Answer: (3) An investor plans to invest \$500 a year and expects to get a 10.5% return. If the investor makes these contributions at the end of the next 20 years, what is the present value of this investment today? Answer: (4) What is the present value (PV) of a 12-year lease arrangement with an interest rate of 7.5 percent that requires annual payments of \$4,250 per year with the first payment being due now? Answer: (5) A recent college graduate hopes to have \$200,000 saved in their retirement account 25 years from now by contributing \$150 per month in a 401(k) plan. The goal is to earn 10% annually on the monthly contribution. Will they have the \$200,000 at the end of the 25 years? Answer:

# If you wish to have \$60,000 in 8 years, how much do you need to deposit in the bank today if the account pays an interest rate of 9%?

## Wk 3 – Set 1, Part 1

 Week 3 Financial Exercises Problem Set 1, Part 1 Complete the following problems using either the financial functions in Excel or the Present Value and Future Value formulas as noted below: PV = FV * 1 / (1+i)^n FV = PV * (1+i)^n (1) If you wish to have \$60,000 in 8 years, how much do you need to deposit in the bank today if the account pays an interest rate of 9%? Answer: (2) What will \$110,000 grow to be in 9 years if it is invested today at 11%? Answer: (3) You would like to have \$200,000 in a college fund in 15 years. How much do you need today if you expect to earn 12% while you are investing to pay for your child’s college? Answer: (4) You have been offered \$3,000 in 4 years for providing \$2,000 today into a business venture with a friend. If interest rates are 10%, is this a good investment for you? Answer: (5) What will \$82,000 grow to be in 11 years if it is invested today at 8% and the interest rate is compounded monthly? Answer: (6) How many years will it take for \$136,000 to grow to \$468,000 if it is invested in an account with an annual interest rate of 8% Answer: (7) At what interest rate must \$112,000 be invested so that it will be worth \$392,000 in 14 years? Answer:

&”Arial,Regular”&10 Wk 2 Financial Exercises – Part 1 HCS/385 v4 Page &P of &N

&”Arial,Regular”&10HCS/385 v4

## Wk 3 – Set 1, Part 2

&”Arial,Regular”&10Wk 2 Financial Exercises – Part 2 HCS/385 v4 Page &P of &N

&”Arial,Regular”&10HCS/385 v4