account. 20. a. 0 1 2 3 18 First, we need to calculate the PV of $160,000 in 18 years. PV 160,000 (1.08) = 40,039.84 N I/Y PV PMT FV Excel Formula Given: 18 8.00% 0 160,000 Solve for PV: (40,039.84) =PV(0.08,18,0,160000) In order for your parents to have $160,000 in your college account by your 18th birthday, the 18-year annuity must have a PV of $40,039.84. Solving for the annuity payments: 40,039.84 C = 1 1 1 0.08 1.0818 = $4, 272.33 FV Excel Formula which must be saved each year to reach the goal. N1/Y PV PMT Given: 18 8.00% 40,039.84 Solve for PMT: (4,272) 0 =PMT(0.08,18,40039.84,0) b. First, we need to calculate the PV of $200,000 in 18 years. 200,000 (1.08) = 50,049.81 PV = PV C= N I/Y PMT FV Excel Formula Given: 18 8.00% 0 200,000 Solve for PV: (50,049.81) =PV(0.08,18,0,200000) In order for your parents to have $200,000 in your college account by your 18th birthday, the 18-year annuity must have a PV of $50,049.81. Solving for the annuity payments: $50,049.81 1 1 1- 0.08 1.08 = $5340.42 which must be saved each year to reach the goal. N I/ PV PMT FV Excel Formula Given: 18.00 0.08 50,049.81 0.00 Solve for PMT: -5340.42 =PMT(0.08,18,50049.81,0)