Apple iWork '09 User Manual
Page 121
Chapter 6
Financial Functions
121
Example 2
Assume you are presented with an investment opportunity. The opportunity requires that you invest
$50,000 in a discount security today and then nothing further. The discount security matures in 14
years and has a redemption value of $100,000. Your alternative is to leave your money in your money
market savings account where it is expected to earn an annual yield of 5.25%.
One way to evaluate this opportunity would be to consider how much the $50,000 would be worth
at the end of the investment period and compare that to the redemption value of the security.
Using the FV function, you can determine the expected future value of the money market account.
Based on the assumptions given, it would be $102,348.03. Therefore, if all assumptions happen as
expected, it would be better to keep the money in the money market account since its value after 14
years ($102,348.03) exceeds the redemption value of the security ($100,000).
periodic-rate
num-periods
payment
present-value
when-due
=FV(B2, C2, D2,
E2, F2)
0.0525
14
0
-50000
1
Related Topics
For related functions and additional information, see:
“Choosing Which Time Value of Money Function to Use” on page 348
“Common Arguments Used in Financial Functions” on page 341
“Listing of Financial Functions” on page 96
“Value Types” on page 36
“The Elements of Formulas” on page 15
“Using the Keyboard and Mouse to Create and Edit Formulas” on page 26
“Pasting from Examples in Help” on page 41