Lab 5 – Math 2355 – Spring 2016
(15pts)
The purpose of Lab 5 is to “put it all together.”
Name:
______________________________________ Discussion Section: ____________
Due Date: March 4th by 8:30am
There are 4 problems that you are to solve using Excel with the techniques learned in labs 2, 3, and 4. BE
SURE TO PRINT PAGES WHEN ASKED TO DO SO AS THEY ARE WORTH POINTS.
Start Excel, open up your 2355 Excel file and add a new sheet to the end after the sheet named “L4 #3”,
name the new sheet “L5#1”.
Problem 1: The proprietor of the Leisure Travel Service compiled the following data relating the annual
profit of the firm to its annual advertising expenditure (both measured in thousands of dollars):
Annual Advertising Expenditure (x)
Annual Profit (y)
12
60
14
70
17
90
21
100
26
100
30
120
Use Excel to construct an "X Y scatter" chart containing the equation for the line of best fit. The chart
should have an appropriate title, labeled axes: define the x-axis as Annual Advertising Expenditure (in
thousands) and the y-axis as Annual Profit (in thousands), proper scale for both axes, and the chart should
be adjusted to an appropriate size.
Add the equation for the trendline to the chart and format to 3 decimal places.
Type your name in cell D1, your student ID number in cell D2 and print this sheet, landscape style,
with its graph. Be sure to attach it to your lab as it is worth points.
a)
Write the equation for the line of best fit giving m & b rounded to 3 decimal places:
__________________________________
b) Using the line of best fit determine how many thousands of dollars need to be spent on advertising to
realize an annual profit of $150,000.
__________________________________
c) If the annual advertising expenditure is $18,000, how many thousands of dollars can be expected for the
annual profit?
__________________________________
d) Approximately how many more thousands of dollars annual profit can be expected for each $1000
increase in advertising expenditure?
__________________________________
Add a new sheet at the end of your book and rename it “L5 #2”.
Problem 2: You invest $12,500 into a certificate of deposit (CD) for 5 years that pays 2.69% annual
interest compounded quarterly. Construct a table showing the growth of the CD across the five years. Be
sure to place appropriate labels on each column.
Type your name in cell D2, your student ID number in cell D3. Fit to 1 page high by 1 page wide,
portrait style, and print this sheet. Be sure to attach it to your lab as it is worth points.
What is the value of the CD at the end of the five years? _______________
2
Add a new sheet at the end of your book and rename it “L5 #3”.
Problem 3: Suppose that you want to purchase a home for $155,000, with a 20-year mortgage at 6.65%
interest compounded monthly. Suppose that you can put 15% down and a loan is taken on the balance. Use
the paste function to determine the monthly payments and then create an amortization schedule for the loan.
a)
What are your monthly payment?
_________________________
b) You decide to pay an extra $150 per period as you pay back the loan. By doing this, you will decrease
the loan duration by approximately how many periods?
_________________________
c)
In addition to paying an extra $150 per period as you pay back the loan, you decide to make an extra
payment of $2000 at the 36th period and $2575 at the 72nd period. By doing this, you will decrease the
original loan duration by approximately how many periods?
__________________________
After performing parts (a)-(c) select a print area that includes the insert function and the first 72
periods. Use the control ~ sequence to show all formulas. Adjust column widths as necessary so all
formulas show. Fit to 1 page high by 1 page wide. Type your name in D1, print and attach to this
lab as it is worth points.
d) Suppose at the same time the 1st payment is made on the loan you invest in an ordinary annuity so that
at some point in the future you can have enough money to make a lump sum payment and pay off the
balance of the loan. You call several institutions and find that the best interest rate is 6% compounded
monthly. You decide to make $375 monthly installments, with payments made at the end of each
period. Determine the period when you will be able to make the lump sum payment and pay off the
loan. (HINT: formulate the annuity in a column along side of the loan and determine the 1 st period
where the annuity is greater than or equal to the loan balance.). Do not incorporate parts (b) and (c).
The _________________period.
At this point, the annuity is worth ______________ and the balance on the loan is ____________.
Add a new sheet at the end of your book and rename it “L5 #4”.
Problem 4: Suppose you deposit $65 at the beginning of every week for the next 20 years into an account
paying 7.4% annual interest compounded weekly. What is the future value of this account after 20 years?
The appropriate paste function from Excel is shown. Fill in, show, exact values for Rate, Nper, Pmt, PV,
and Type. Do not round any numbers. Also, give the value shown in the insert function box for Formula
result.