Tutorial 9
Quick Check Answers
Session 9.1
1. Positive cash flow is money flowing to you or your company. Negative cash flow is
money flowing away from you or your company. Borrowing $100 from a bank is a
positive cash flow because the money is flowing to you.
2. Enter the formula =FV(5.8%/12,10*12,–50,500), which returns the value $7,213.86.
3. Enter the formula =PMT(5.2%/12,2*12,1000,3000), which returns the negative cash flow
value ($162.84).
4. Enter the formula =NPER(7%/12,–1500,200000), which returns the value 258.59315. It
will take you 259 months to pay off the loan.
5. If you change the monthly payment to −1000, Excel returns the value #NUM!, indicating
that you cannot pay off the loan at this low of a monthly payment.
6. Enter the formula =RATE(4*10,–7200,200000)*4, which returns the value 7.65%.
7. To calculate the monthly payment, enter the formula =PMT(6.3%/12,10*12,150000),
which returns the negative cash flow value ($1,688.00). The amount of interest paid in
the first month is calculated with the formula =IPMT(6.3%/12,1,10*12,150000), which
Carey / NP Excel 2010
Tutorial 9 Quick Check Answers
page 1
returns the value ($787.50). The principal payment in the first month is calculated with
the formula =PPMT(6.3%/12,1,10*12,150000), which returns the value ($900.50).
8. Enter the formula =CUMIPMT(6.3%/12, 10*12, 150000, 1, 12, 0) to calculate the total
interest payments during the first 12 months of the loan. Excel returns the value
($9,132.45) indicating that $9,312.45 would be paid towards interest in the first year. To
calculate the total paid towards the principal in the first year, enter the formula
=CUMPRINC(6.3%/12, 10*12, 150000, 1, 12, 0). Excel returns the value ($11,123.49)
indicating that $11,123.49 of the principal will be paid off.
Session 9.2
1. 1750, 2500, 3250
2. 1414.2136, 2000, 2828.4271
3. 1500, 2000, 2500, 3000
4. 1150, 1322.5, 1520.875, 1749.006
5. Enter the formula =SLN(25000, 2000, 5), which returns the value $4600.00.
6. Enter the formula =DB(25000, 2000, 5, 1), which returns the value $9925.00.
7. Enter the formula =DDB(25000, 2000, 5, 1, 2), which returns the value $10,000.
Session 9.3
1. Payback periods do not take into account the time value of money.
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Tutorial 9 Quick Check Answers
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2. Use the formula =PV(5%,1,0,100) to calculate the present value of $100 a year from now.
Excel returns the negative cash flow value ($95.24), indicating that $100 a year from now
is a fair exchange for $95.24 today. In other words, $100 a year from now is worth more
than $95 today by 24 cents.
3. Enter the Excel formula =NPV(6%,50,75,100), which returns the value $197.88.
4. Enter the formula =NPV(6%, 75, 75, 75, 75, 75, 75)–350, which returns the value $18.80.
5. Enter the formula =NPV(6%, −350, 75, 75, 75, 75, 75, 75). Excel returns the value
$17.74.
6. Enter the formula =IRR(range), where range is a cell range containing the values: –350,
75, 75, 75, 75, 75, 75. Excel returns the value 7.69%. You should take this investment
over one offering a 7.3% internal rate of return.
7. Red tracer arrows indicate that the cells connected to the active cell containing errors.
8. The formula points to a worksheet cell that has been deleted.
Carey / NP Excel 2010
Tutorial 9 Quick Check Answers
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