Qusetion: Consider again Lindsay's investment problem (Problem). The real value of Lindsay's account after 30 years of investing will depend on inflation over that period. In the Excel function 5NPV(rate, value1, value2, ...), rate is called the discount rate, and value1, value2 etc. are incomes (positive) or expenditures (negative) over equal periods of time. Update your model previously developed in Problem using the NPV function to get the net present value of Lindsay's retirement fund. Construct a data table that shows the net present value of Lindsay's retirement fund for various levels of return and inflation (discount rate). Use a data table to vary the return from 0 to 12 percent in increments of 1 percent and the discount rate from 0 to 4 percent in increments of 1 percent to show the impact on the net present value.
Problem: Lindsay is 25 years old and has a new job in Web development. Lindsay wants to make sure she is financially sound in 30 years, so she plans to invest the same amount into a retirement account at the end of every year for the next 30 years. Construct a data table that will show Lindsay the balance of her retirement account for various levels of annual investment and return. Develop the two-way table for annual investment amounts of $5,000 to $20,000 in increments of $1,000 and for returns of 0 to 12 percent in increments of 1 percent. Note that because Lindsay invests at the end of the year, there is no interest earned on that year's contribution for the year in which she contributes.