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F. Naz, Chartered Accountant
Category: Homework
Satisfied Customers: 5314
Experience:  Experience with chartered accountancy
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# Im stuck with this scenario and I have been trying my hardest

### Resolved Question:

I'm stuck with this scenario and I have been trying my hardest to figure iut out. However, this is best formulated in Excel, but I do not know how to formulate the cells nor show the work on it.
Choose an asset you would like to purchase in 5 years. Calculate how much you need to save for the next five years to purchase this asset.

Base the interest rate on the five year interest rate from the Treasury department: .075%

•Calculate the required yearly savings.
•How much money could be made using the same interest rate with the amount of yearly cash flows which would have been saved for the investment if these amounts had been invested instead?

My choice of asset is a realistic 1967 Mustang Shelby GT 500 for \$200,000. In this case, I need to figure out how much a year I need ot put away over a 5 year period with a rate of 2.5% and a inflation rate of 5%. Excel document is fine and would like to see the work behind it to get a better understanding of FV's of Annuities while also allowing me to explain theconclusive results in my paper.
Submitted: 5 years ago.
Category: Homework
Expert:  F. Naz replied 5 years ago.
Do you only need the calculation, thanks
Customer: replied 5 years ago.

The calculate formula with the work numbers involved; like this formula which apparently is the basic FV formula for Annuities FV=CF x {[(1+r)N-1]/r}. I basically need to show that I know how to calculate through the use of the Formulas. Excel spreadsheet regarding dollar amounts work as well when putting the formulas in the cells.

Customer: replied 5 years ago.

The professor recommended using 2.5% rate with a 5% inflation but that confused me right there even though the actual 5 yr Treausury Yield rate is at .075

Expert:  F. Naz replied 5 years ago.