There are three (3) Application Activities that must be completed this semester. The purpose of these assignments is to encourage you to become comfortable with, and proficient at using Excel, and/or calculating more "real-life" problems relating to financial mathematics. This is a very important skill that you will be bringing with you to the workforce.

This second Application Activity is intended to reinforce concepts covered in Learning Outcome 03:

• 3.1 Distinguish between types of annuities based on term, payment date, and conversion period.
• 3.2 Compute the future value, present value, interest rate, term, and payment size for ordinary simple annuities.
• 3.3 Compute the future value, present value, interest rate, term, and payment size for ordinary general annuities.

Process

Step 1: Prepare your Excel Spreadsheet

Open a new Microsoft Excel Workbook. Rename the filestudentIDnumber_AA02.

Make sure you have three sheets. Label (rename) them as follows:

• • Sheet1: My Dream Car
  • Sheet2: Annuity Formulas
  • Sheet3:Solving Annuities

Step 2: Pick a Car, any Car!

The calculations for this assignment will involve the imaginary purchase of a vehicle. Visit any vehicle dealership site you'd like (Honda, Dodge, Tesla, Nissan, Audi, Mercedez, etc.) and pick your favourite vehicle. Build/price the vehicle until it meets your dream specifications!

The dealership website will give you a total price (including tax) for the vehicle. You should also find financing options available. Take note of the interest rate provided (usually something like 4.99% APR (Annual Percentage Rate).

In the "My Dream Car" sheet, write the total vehicle price (in Cell A1) and nominal annual interest rate (in Cell B1) charged for financing the vehicle. Insert a screenshot/picture of your dream vehicle somewhere in the "My Dream Car" Sheet.

Step 3: Annuity Formulas

We have covered annuities in class using the BAII+ calculator. You can learn more about the annuity formulas in Excel from this free online textbook:https://ecampusontario.pressbooks.pub/businessmath/

In the Sheet you renamed "Annuity Formulas", list the following formulas and describe how they are used in Excel (i.e. =FV and =Nper, etc.), and what they mean (in your own words).

• • FV
  • PV
  • Nper
  • Pmt
  • Type

Withgeneral annuities, where PY CY, theratein Excel is called the 'equivalent' interest rate: (1 + i)^CY/PY - 1

For example: If IY = 10%, CY = 4 and PY = 2, the value you must use for rate is,

= (1 + 0.10/4)^4/2 - 1

= 1.025² - 1

= 0.050625

Step 4: Solving Annuities

In the Sheet you renamed "Solving Annuities", the FIRST thing that should be included is the list of data you are using. You will list the following variables at the very top of your submission. Failure to do this will make it impossible to mark your work!

• ${A} = 2x your birth year + your birth date (ex. if you were born in the year 2000 on September 30, this number will be 2030 x 2 = $4060)
• {B} years= your current age
• ${C} = the price of your dream car
• {D}% = the APR (nominal annual rate) for financing the vehicle

THIS LIST OF VARIABLES MUST BE STATED BEFORE YOU COMPLETE ANY CALCULATIONS!

Problem

You have decided that you would like to retire at age 65. You would like your monthly pension to be{A}. Your RRIF (Registered Retirement Income Fund) earns 3.00% p.a. compounded semi-annually for 25 years after you retire.

REMEMBER: When using Excel for general annuities,rate =(1 + i)^CY/PY- 1

1. 1. How much money do you need in your account when you retire?
   2. How much money do you need in your accountnow (at your current age of {B} years)?
   3. Once you retire, you intend to buy your dream car and will contribute a down payment of $10,000. If the vehicle costs{C} and can be financed for {D} compounded annually, what is your monthly payment on the vehicle if you finance for 96 months?

Format your Workbook in aprofessionalandvisually appealingway. Your answers will not be marked correct if the proper Excel function is not used or linked to the appropriate cells. Use asans seriffont(no larger than size 13) that will be consistent throughout your Workbook. Highlight your final answers so that they are clearly visible. Be creative, butespecially professional!

Step 4: Solving Annuities In the Sheet you renamed "Solving Annuities", the FIRST thing that should be included is the list of data you are using. You will list the following variables at the very top of your submission. Failure to do this will make it impossible to mark your work! ${A} = 2x your birth year + your birth date (ex. if you were born in the year 2000 on September 30, this number will be 2030 x 2 = $4060) {B} years = your current age ${C} = the price of your dream car {D}% = the APR (nominal annual rate) for financing the vehicle THIS LIST OF VARIABLES MUST BE STATED BEFORE YOU COMPLETE ANY CALCULATIONS! Problem You have decided that you would like to retire at age 65. You would like your monthly pension to be {A}. Your RRIF (Registered Retirement Income Fund) earns 3.00% p.a. compounded semi-annually for 25 years after you retire. REMEMBER: When using Excel for general annuities, rate = (1 + i)CY/PY - 1 How much money do you need in your account when you retire? How much money do you need in your account now (at your current age of {B} years)? Once you retire, you intend to buy your dream car and will contribute a down payment of $10,000. If the vehicle costs {C} and can be financed for {D} compounded annually, what is your monthly payment on the vehicle if you finance for 96 months