The recorded session, provides a good overview on working this problem and I use the "A Number of Useful Financial Spreadsheets" to work a very similar problem. Use the spreadsheet as your template but you may have to change calculated cells. I have not set this problem up so you can just enter the numbers and the spreadsheet calculates answer for you.

The problem you will answer has the following fact pattern:

A couple has just given birth to a baby and named him Jimmy. They want to set up a college savings account for Jimmy and start saving for his college education. The following facts will help you work this problem:

Current Cost of Tuition, Room &Board $25,000

Expected Average Inflation for College Costs 5% (My example in the lecture used 4%)

Expected Average Percentage Return onSavings 4%

Years until you need the first tuitionpayment 18

You will make 18 yearly payments with the first payment starting a year from now.

How much will the couple need at the end of 18 years to fund Jimmy's college education for 4 years? Round your answer to a whole number (Example 150450.61 rounded to 150451 with no commas or dollar signs).

Answer I came up with: 244155

Based on the amount you calculated above, how much will the couple need to save each year in Jimmy's account to reach their goal of having enough money to fund his college education at the end of 18 years? Round your answer to a whole number (Example 1450.61 rounded to 1451 with no commas or dollar signs)

Answer rating: 100% (QA)

To calculate the amount needed at the end of 18 years to fund Jimmys college education for 4 years w... View the full answer