Solution by Spreadsheet
Figure 7–12 provides a spreadsheet solution. The future worth values F1 through F3 are determined
by the conditional IF statements in rows 3 through 5. The functions are shown in column
D. In each year, Equation [7.10] is applied. If there are surplus funds generated by the project,
F t–1 0 and the investment rate ii (in cell E7) is used to find F t . For example, because the F1
value (in cell C3) of $1740 0, the time value of money for the next year is calculated at the
investment rate of 12% per year, as shown in the hand solution above for year 2.