Submit the following in an Excel file named financialassign.xlsx. For each
problem below, use a separate worksheet and name the worksheet according to
its problem number (e.g., problem 1, problem 2, …).
Make sure that all your formulas are dynamic (i.e., use cell references to
cells that contain the constants and are clearly labeled. Do not use
constant terms in your formula or rely on the default values).
Calculate the amount you would need to deposit today in order to buy your
dream car in 7 years at the current market interest rate assuming a monthly
period? Be sure to explicitly state the current market interest rate, the
primary key you used to lookup the current market interest rate (see the
Hint), your dream car, and the cost of your dream car. Briefly explain what
your answer means in layman’s terms.Hint: you can assume that your dream
car will cost the same in the future as it will today and that the market
rate of interest is the same as the prime rate (lookup the prime rate via
the Bank of Canada Web Database). Note that the prime rate is usually
posted as an APR. Include the primary key you used to lookup the prime rate
(e.g., V#####), as well as the prime rate, in your answer (make sure they
are clearly labeled).
Recalculate the present value for question 1) using an APR of 6.25%.
Briefly explain why the money you have to pay today decreases considerably
(there are two fundamental reasons).
Calculate the yearly payments (paid at the end of each year) needed to
arrive at the value of your dream car in 7 years, again using the current
market interest rate. Do not invest any money today. Briefly explain what
your answer means in layman’s terms.Hint: use type = 0 so that the payments
are made at the end of the year.
Calculate the number of months required to save for your dream car, again
using the current market interest rate and the payment amount calculated in
problem 3, divided by 12. The monthly payments are made at the end of each
month. For simplicity, assume that the current market interest rate is an
APR. Briefly explain why it takes less time to save for you car using
monthly payments (problem 4) instead of yearly payments (problem 3), even
though the gross amount you pay each year is the same.
Make up your own financial problem and solve it using the financial
functions presented in lab 6. After solving the problem, briefly explain
the financial problem in layman’s terms.Hint: You can calculate how long it
will take you to pay off your student loans at a set amount per month and
at the present interest rate. Student loans are usually based on the prime
rate plus two percent.
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