use Excel’s FV function to calculate the future value of a single payment. Assum
ID: 2763806 • Letter: U
Question
use Excel’s FV function to calculate the future value of a single payment. Assume an investor has $1,000 and wants to know the worth of this investment, if invested at 10% for four years. What arguments will you use? What changes in argument would you make if you knew the future value of the investment, but wanted to know what the investment would be worth today? Once you solve for the FV of 1,000, use the answer you get to solve for the PV (using the same 10% rate at 4 periods). What relationship do you see? Attach your spreadsheet to show your work
Explanation / Answer
Excel formula for first part:
=FV(0.1,4,0,1000)
=1464.1
Excel formula for second part:
=PV(0.1,4,0,1464.1)
=1000
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