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.

###

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

Kandit Kerdwiriyaskul

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

$
$

5,000
90,000
6.0%

Annual
Contribution

$
5,300
10,618
16,255
22,230
28,564
35,278
42,395
49,938
57,935
66,411
75,395
84,919
95,014
105,715
117,058
129,082
141,827

5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000

Annual Return
Ending Balance
on Investment
$

300 $
318
637
975
1,334
1,714
2,117
2,544
2,996
3,476
3,985
4,524
5,095
5,701
6,343
7,023
7,745
8,510

5,300
10,618
16,255
22,230
28,564
35,278
42,395
49,938
57,935
66,411
75,395
84,919
95,014
105,715
117,058
129,082
141,827
155,336

Annual Additions to Fund

$16,000
$14,000
$12,000
$10,000
$8,000

Annual Return on
Investment

$6,000
$4,000

Annual Contribution

$2,000
$0
Year

1 Yes, he reaches the total ending balance of 155,336

2 His annual contribution for each year is 3210
3 4018 for his son to study 5 years.

Problem Number:
Student's Name:

Think Like an Accountant, Chapter 2

Kandit Kerdwiriyaskul

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 needs to contribute 5716 each year to reach his goal

5 If he starts at age 43, he needs to contribute 20,074$ to reach his goal.
6 Reflective Q What advice would you give to a friend about saving for a pension?
Plan fast and start as quick as you can with high amount of money because it will pay you back later

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
$

35

40

45

Annual
Contribution

$
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

20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
20,074
-

50

55

60

65

70

Annual Return
Ending Balance
on Investment
$

$
1,204
2,481
3,834
5,269
6,790
8,401
10,110
11,921
13,841
15,876
18,032
20,319
22,742
25,311
28,035
30,921
33,981
37,224
40,662
44,306
48,169
52,264
56,604
60,000
63,600
67,416
71,461
75,749

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
1,338,226