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.

Click the Analysis worksheet tab to view the template.

Key your name in cell C2.

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

Use the schedule to answer question (1).

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

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

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

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

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.

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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 (?).

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

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

Save your work and submit the saved Excel File on Edmodo.

Problem Number:
Student's Name:

Think Like an Accountant, Chapter 2

Jean Srisakulpinyo

Annual Contribution
Total Investment
Annual Rate of Return
Beginning
Balance

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

$
$

- $
4,265
8,544
13,081
17,889
22,986
28,388
34,115
40,186
46,620
53,441
60,671
68,335
76,459
85,070
94,197
103,873
114,129

4,024
72,424
6.0%
Annual
Annual Return
Ending Balance
Contribution
on Investment
4,024 $
241 $
4,265
4,024
256
8,544
4,024
513
13,081
4,024
785
17,889
4,024
1,073
22,986
4,024
1,379
28,388
4,024
1,703
34,115
4,024
2,047
40,186
4,024
2,411
46,620
4,024
2,797
53,441
4,024
3,206
60,671
4,024
3,640
68,335
4,024
4,100
76,459
4,024
4,588
85,070
4,024
5,104
94,197
4,024
5,652
103,873
4,024
6,232
114,129
4,024
6,848
125,000

Annual Additions to Fund

$12,000
$10,000
$8,000
$6,000
$4,000

Annual Return on
Investment

$2,000

Annual Contribution

$0
Year

1 Yes, he will receive 155,336 after his son is 18 years old.

2 He need to contribute money at $3,219 each year for reach his goal.
3 He will need to contribute money at $4,024 to enroll his son for 5 years.

Problem Number:
Student's Name:

Think Like an Accountant, Chapter 2

Jean Srisakulpinyo

Annual Contribution
Annual Rate of Return
Contributions Begin at Age
Contributions End at Age
Total Contributions

20,074
6.0%
43
65
461,703

4 He need to contribute money about $5,716 for each year to reachs $1,000,000 when he is 65.
5 If he start investing at age 43, he need to contribute money about $20,074 for each year to reachs $1,000,000 when he is 65.
6 Reflective Q What advice would you give to a friend about saving for a pension?
Tell them to be careful with calulation and use what if analysis corectly.

Ending Balance by Age

$1,500,000
$1,000,000
$500,000
$20

Age
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
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70

25

30

Beginning Balance
$

21,278
43,834
67,742
93,085
119,949
148,424
178,608
210,603
244,518
280,467
318,574
358,967
401,783
447,169
495,277
546,272
600,327
657,625
718,361
782,742
850,985
923,322
1,000,000
1,060,000
1,123,600
1,191,016
1,262,477

35

40

45

50

55

60

65

70

Annual
Annual Return
Ending Balance
Contribution
on Investment
$
$
$
20,074
1,204
21,278
20,074
2,481
43,834
20,074
3,834
67,742
20,074
5,269
93,085
20,074
6,790
119,949
20,074
8,401
148,424
20,074
10,110
178,608
20,074
11,921
210,603
20,074
13,841
244,518
20,074
15,876
280,467
20,074
18,032
318,574
20,074
20,319
358,967
20,074
22,742
401,783
20,074
25,311
447,169
20,074
28,035
495,277
20,074
30,921
546,272
20,074
33,981
600,327
20,074
37,224
657,625
20,074
40,662
718,361
20,074
44,306
782,742
20,074
48,169
850,985
20,074
52,264
923,322
20,074
56,604
1,000,000
60,000
1,060,000
63,600
1,123,600
67,416
1,191,016
71,461
1,262,477
75,749
1,338,226