TITLE THINK LIKE AN ACCOUNTANT

Chapter 2
COLLEGE The College worksheet contains a schedule that calculates the annual return on investment for a college fund. For each year,
the annual contribution and the annual return on the investment is used to calculate a new ending value. The chart illustrates
how the annual return on investments accelerates over time.

STEPS 1 Read all of the steps before working with this workbook.

2 Click the Analysis worksheet tab to view the template.

3 Key your name in cell C2.

4 Enter the appropriate data in cells denoted by a question mark (?).

5 Use the schedule to answer question (1).

Modify the schedule to determine the amounts necessary to reach the stated goals:

6 Follow steps 7-14 to answer questions (2) and (3).

7 On the Data tab in the Data Tools group, select What-If Analysis and Goal Seek.

8 In the Goal Seek window, for the Set cell box, select the cell from the analysis containing the Ending Balance for Year 18.

9 For the Set cell box, select the cell from the analysis containing the Ending Balance for Year 18.

### For the To value box, enter the goal amount (do not include dollar signs or commas).

### For the By changing cell box, select the cell from the analysis containing the amount to be changed (the annual contribution).

### Click OK.

### Use the schedule to answer the questions.

RETIREMENT The Retirement worksheet resembles the College worksheet. The schedule calculates the annual return on investment for a
retirement fund for a single annual investment between a starting and ending age. The longer period of time in this worksheet
provides a more dynamic illustration of how investments grow over time.

STEPS 1 Enter the appropriate data in cells denoted by a question mark (?).

2 Use Goal Seek to determine the annual contribution necessary to answer each question.

3 Print the worksheet solution for each question, as instructed by your teacher.

4 Save your work and submit the saved Excel File on Edmodo.
Problem Number: Think Like an Accountant, Chapter 2
Student's Name: Alinnan Thiptanakit

Annual Contribution $ 4,024

Total Investment $ 72,424
Annual Rate of Return 6.0%

Beginning Annual Annual Return

Year Ending Balance
Balance Contribution on Investment
1 $ - $ 4,024 $ 241 $ 4,265 1 Yes, after 18 years he will get 155,336
2 4,265 4,024 256 8,544 2 3219
3 8,544 4,024 513 13,081 3 4024
4 13,081 4,024 785 17,889
5 17,889 4,024 1,073 22,986
6 22,986 4,024 1,379 28,388
7 28,388 4,024 1,703 34,115
8 34,115 4,024 2,047 40,186
9 40,186 4,024 2,411 46,620
10 46,620 4,024 2,797 53,441
11 53,441 4,024 3,206 60,671
12 60,671 4,024 3,640 68,335
13 68,335 4,024 4,100 76,459
14 76,459 4,024 4,588 85,070
15 85,070 4,024 5,104 94,197
16 94,197 4,024 5,652 103,873
17 103,873 4,024 6,232 114,129
18 114,129 4,024 6,848 125,000

Annual Additions to Fund

$12,000

$10,000

$8,000

$6,000
Annual Return on
$4,000 Investment

$2,000 Annual Contribution

$0

Year
Problem Number: Think Like an Accountant, Chapter 2
Student's Name: Alinnan Thiptanakit

Annual Contribution $ 5,000 4 205,000

Annual Rate of Return 6.0% 5 115,000
Contributions Begin at Age 43 6 Reflective Q What advice would you give to a friend about saving for a pension?
Contributions End at Age 65 My advice is to save amount of money or a lot of money then do pension since it gets lot of payback later on.
Total Contributions $ 115,000

Ending Balance by Age

$400,000
$300,000
$200,000
$100,000
$-
20 25 30 35 40 45 50 55 60 65 70

Annual Annual Return

Age Beginning Balance Ending Balance
Contribution on Investment
18 $ - $ - $ - $ -
19 - - - -
20 - - - -
21 - - - -
22 - - - -
23 - - - -
24 - - - -
25 - - - -
26 - - - -
27 - - - -
28 - - - -
29 - - - -
30 - - - -
31 - - - -
32 - - - -
33 - - - -
34 - - - -
35 - - - -
36 - - - -
37 - - - -
38 - - - -
39 - - - -
40 - - - -
41 - - - -
42 - - - -
43 - 5,000 300 5,300
44 5,300 5,000 618 10,918
45 10,918 5,000 955 16,873
46 16,873 5,000 1,312 23,185
47 23,185 5,000 1,691 29,877
48 29,877 5,000 2,093 36,969
49 36,969 5,000 2,518 44,487
50 44,487 5,000 2,969 52,457
51 52,457 5,000 3,447 60,904
52 60,904 5,000 3,954 69,858
53 69,858 5,000 4,491 79,350
54 79,350 5,000 5,061 89,411
55 89,411 5,000 5,665 100,075
56 100,075 5,000 6,305 111,380
57 111,380 5,000 6,983 123,363
58 123,363 5,000 7,702 136,064
59 136,064 5,000 8,464 149,528
60 149,528 5,000 9,272 163,800
61 163,800 5,000 10,128 178,928
62 178,928 5,000 11,036 194,964
63 194,964 5,000 11,998 211,961
64 211,961 5,000 13,018 229,979
65 229,979 5,000 14,099 249,078
66 249,078 - 14,945 264,023
67 264,023 - 15,841 279,864
68 279,864 - 16,792 296,656
69 296,656 - 17,799 314,455
70 314,455 - 18,867 333,322