Download Financial Literacy Spreadsheet Follow

Financial Literacy Spreadsheet
Follow-Up
8 points
In this activity you will be making adjustments to your original
spreadsheet. Before starting, save a 2nd version of your spreadsheet with
the name “spreadsheet adjusted” so you can come back to the original
version when needed.
1) 2 points. How much could you have earned? Find the highest
price for each of your stocks since their purchase. Directions:
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Choose “Historical prices” from the left side of each of your stocks’
homepages. www.google.com/finance
Inspect the “High” column and find the highest price for each stock
since we started the project.
Insert these values into column F in your adjusted spreadsheet to
compute what your total could have been.
a) How much money would you have (cell Q4) if you had sold at the
highest price?
b) How much more is this than what you actually had in cell Q4 of
your original spreadsheet?
2) 2 points. Capital Gains.
From Wikipedia:
“A capital gain is a profit that results from a disposition of a capital
asset, such as stock, bond or real estate, where the amount realized on
the disposition exceeds the purchase price. The gain is the difference
between a higher selling price and a lower purchase price.[1] Conversely,
a capital loss arises if the proceeds from the sale of a capital asset are
less than the purchase price.
In the United States of America, individuals and corporations pay income
tax on the net total of all their capital gains just as they do on other sorts
of income.”
For your stocks which made money, describe below what your capital
gains tax would have been assuming a 15% capital gains tax rate. Use
your original spreadsheet. Column J of your original spreadsheet will
help. Describe each stock individually and show your calculations below
(you may use a calculator).
3) 2 points. Broker Fee.
Purchasing stocks requires the assistance of a licensed stock broker.
Many people choose to use online brokers for such transactions.
Generally, buying stock and selling stock are considered separate
transactions by brokers. Assuming we sold our stocks at the end of this
project, we would have made 6 transactions (3 purchases, 3 sales).
Find the total transaction fee (3 purchases, 3 sales) for any online
broker. Describe here in detail how that would have affected your total
(cell Q4) from your original spreadsheet.
4) 2 points. Compound Interest.
Let’s change up your CD and think long-term (years instead of months).
a) In your original spreadsheet, change the word “Months” in cell
M1 to “Years”.
b) A mathematical principle called compound interest describes the
idea of “interest earning interest”. In other words, when you
receive that gift from the bank called interest, if you add it to your
account, now the amount of money earning interest (called the
principal) is more. Now you’ve got the power to earn more interest
because you’re investing more money. When computed annually ,
the formula for compound interest looks like this:
T= P (i+1)^y
Where T= total, P=principal, i=interest rate, and y=years.
So, change cell N4 in your original spreadsheet to reflect this new longterm view of your CD. Change the formula in N4 to:
=L4*(.02+1)^M4
c) In the world of finance there is something called the Rule of 72.
This rule states that if you multiple the interest rate by the number
of years your investment takes to double in value, you should get
about 72. Using 2 as your interest rate (from 2%), try this out in
your original spreadsheet by adjusting cell M4. Describe with
details here what you find and if the Rule of 72 seems to be true for
your CD.
d) Save the spreadsheet as it stands now as “spreadsheet adjusted 2”.
This will keep the original spreadsheet unchanged on your W: drive
in case you’d like to keep up with your investments after this class
is over.