Instructions: set up an EXCEL worksheet to answer the following questions. You must show your formulas.

1. What is the future value of $500 invested at 8% for three years?

2. Your rich uncle gives you $250 per year for the next five years, beginning one year from today. You wisely choose to invest this money, and expect to earn 6% annually on your investment. How much money do you have at the end of 5 years?

3. Continue from question 3: Use the same interest rate of 6%, calculate the present value of these five payments of $250 at time 0.

Here is the time line for cash flows mentioned in questions 3 and 4:

0 1 2 3 4 5

$250 $250 $250 $250 $250