# I don’t know how make this formula in Excel somebody can help with this homework. Thank you!Part

I don’t know how make this formula in Excel somebody can help with this homework. Thank you!

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Part

a)

The amount of annual investment can be calculated with the use of PMT (Payment) function/formula of EXCEL. The function/formula for PMT is PMT(Rate,Nper,PV,FV) where Rate = Interest Rate (here, Rate of Return on Mutual Funds), Nper = Period, PV = Present Value (if any) and FV = Future Value (here, Lump Sum Amount Desired at Retirement).

_____

Here, Rate = 10%, Nper = 65 – 23 = 42, PV = 0 and FV = \$2,000,000

Using these values in the above function/formula for PMT, we get,

Amount to be Invested Annually = PMT(10%,42,0,2000000) = \$3,719.98

Bella will have to invest an amount of \$3719.98 annually to achieve the desired lump sum amount of \$2,000,000.

_____

Part b)

Using the same PMT function/formula as specified in Part a) we can arrive at the amount of monthly investment.

Here, Rate = 10%/12, Nper = (65 – 23)*12 = 42*12 = 504, PV = 0 and FV = \$2,000,000

Using these values in the above function/formula for PMT, we get,

Amount to be Invested Monthly = PMT(10%/12,504,0,2000000) = \$258.25

Bella will have to invest an amount of \$258.25 on a monthly basis to achieve the desired lump sum amount of \$2,000,000.

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