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6 The following portion of a spreadsheet can be used to explore how Oseola McCarty (page 266) could have saved $150,000 in 75 years. To limit the size of the spreadsheet, it is assumed that savings and interest on her bank account were deposited only once each year and that the deposit was made at the end of the interest period. This is only the start of the complete spreadsheet. 1 2 3 st 4 51 A Year 0 B Bank Balance 25 =A2+1=(1+C$4) B2+C$2 A3+1 =(1+C$4)*B3+C$2 A4+1 =(1+C$4) B4+C$2 C Yearly Savings 100 Interest Rate (APR) 0.05

6 The following portion of a spreadsheet can be used to explore how Oseola McCarty (page 266) could have saved $150,000 in 75 years. To limit the size of the spreadsheet, it is assumed that savings and interest on her bank account were deposited only once each year and that the deposit was made at the end of the interest period. This is only the start of the complete spreadsheet. 1 2 3 st 4 51 A Year 0 B Bank Balance 25 =A2+1=(1+C$4) B2+C$2 A3+1 =(1+C$4)*B3+C$2 A4+1 =(1+C$4) B4+C$2 C Yearly Savings 100 Interest Rate (APR) 0.05

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
ChapterM: Time Value Of Money Module
Section: Chapter Questions
Problem 3MC: Refer to the present value table information on the previous page. If Kathleen put 3,000 in a...
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6 The following portion of a spreadsheet can be used to explore how Oseola McCarty (page 266) could have saved $150,000 in 75 years. To limit the size of the spreadsheet, it is assumed that savings and interest on her bank account were deposited only once each year and that the deposit was made at the end of the interest period. This is only the start of the complete spreadsheet. 1 2 3 4 5 A Year 0 =A2+1 =A3+1 =A4+1 B Bank Balance 25 =(1+C$4) B2+C$2 =(1+C$4)*B3+C$2 =(1+C$4)*B4+C$2 C Yearly Savings 100 Interest Rate (APR) 0.05 a. Study the beginning of the spreadsheet and discuss with a partner what each cell and formula represents. How do the formulas indicate that each annual deposit is made at the end of the interest period? b. Then extend the sheet to cover 75 years. Does this choice of beginning balance, yearly savings, and interest rate result in $150,000 saved after 75 years? c. Experiment with changes in the entries for initial deposit, yearly savings amount, and interest rate. Give four combinations of beginning balance, yearly savings amount, and interest rate that could produce $150,000 in 75 years. d. What other factors should be considered if your analysis is to reflect the probable pattern of Miss McCarty's savings and interest earnings? Show how the spreadsheet formulas could be adjusted to account for those factors.
Transcribed Image Text:6 The following portion of a spreadsheet can be used to explore how Oseola McCarty (page 266) could have saved $150,000 in 75 years. To limit the size of the spreadsheet, it is assumed that savings and interest on her bank account were deposited only once each year and that the deposit was made at the end of the interest period. This is only the start of the complete spreadsheet. 1 2 3 4 5 A Year 0 =A2+1 =A3+1 =A4+1 B Bank Balance 25 =(1+C$4) B2+C$2 =(1+C$4)*B3+C$2 =(1+C$4)*B4+C$2 C Yearly Savings 100 Interest Rate (APR) 0.05 a. Study the beginning of the spreadsheet and discuss with a partner what each cell and formula represents. How do the formulas indicate that each annual deposit is made at the end of the interest period? b. Then extend the sheet to cover 75 years. Does this choice of beginning balance, yearly savings, and interest rate result in $150,000 saved after 75 years? c. Experiment with changes in the entries for initial deposit, yearly savings amount, and interest rate. Give four combinations of beginning balance, yearly savings amount, and interest rate that could produce $150,000 in 75 years. d. What other factors should be considered if your analysis is to reflect the probable pattern of Miss McCarty's savings and interest earnings? Show how the spreadsheet formulas could be adjusted to account for those factors.
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