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

1. How much will an investor have at the end of 5 years if s/he deposits $100 in a savings account that pays 3% interest, compounded annually? (4 points)

2. What is the future value of $500 invested at 8% for three years? (4 points)

3. 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? (12 points)

4. Continue from question 3: Use the same interest rate of 6%, calculate the present value of these five payments of $250 at time 0. (12 points)

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