Future and Present Values (including Annuity Due); Spreadsheet Applicationa. It is said that the Indian who sold Manhattan for $24 was a sharp salesman. If he had put his $24away at 6% compounded semiannually, it would now be worth more than $9 billion, and he couldbuy most of the now-improved land back! Assume that this seller invested on January 1, 1701,the $24 he received.41Required1. Use Excel to determine the balance (in billions) of the investment as of December 31, 2018, assuminga 6% interest rate compounded semiannually. (Hints: Use the FV function in Excel. Also, you can usethe NPER function in Excel to determine the number of years between the end year and the start year.Remember that there are two semiannual periods in every year.)2. Carry out the same calculation using an 8% annual interest rate, compounded semiannually.3. What would be the balances for requirements 1 and 2 if interest is compounded quarterly?4. Assume that the account consisting of this investment had a balance of $9.5 billion as of December 31,2018. How much would the total amount be on December 31, 2024, if the annual interest rate is 8%,compounded semiannually?
Future and
a. It is said that the Indian who sold Manhattan for $24 was a sharp salesman. If he had put his $24
away at 6% compounded semiannually, it would now be worth more than $9 billion, and he could
buy most of the now-improved land back! Assume that this seller invested on January 1, 1701,
the $24 he received.41
Required
1. Use Excel to determine the balance (in billions) of the investment as of December 31, 2018, assuming
a 6% interest rate compounded semiannually. (Hints: Use the FV function in Excel. Also, you can use
the NPER function in Excel to determine the number of years between the end year and the start year.
Remember that there are two semiannual periods in every year.)
2. Carry out the same calculation using an 8% annual interest rate, compounded semiannually.
3. What would be the balances for requirements 1 and 2 if interest is compounded quarterly?
4. Assume that the account consisting of this investment had a balance of $9.5 billion as of December 31,
2018. How much would the total amount be on December 31, 2024, if the annual interest rate is 8%,
compounded semiannually?
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