Question: use excel to solve the question and show all the excel formula You would like to set aside money for your childs education at a
use excel to solve the question and show all the excel formula
You would like to set aside money for your childs education at a 4-year college. Tuition payments will begin in exactly 18 years and will be paid for 4 consecutive years at the childs 18th, 19th, 20th, and 21st birthdays. It is estimated that the full cost of the childs education will be $60,000 per year. Assume the interest rate to be 5%.
- What is the amount needed to meet this cost exactly at 18 years? Use the timeline method to solve this. (Hint: There are 4 payments made in years 18-21. Present value of these amounts at year 18 is required for this question.)
- What is the dollar amount that needs to be set aside today to cover all 4 years of tuition? ( Hint: This should be the present value (at time 0) of the answer from question 4a)
- Suppose you plan on saving an equal amount at the end of each year to meet this cost for the first 17 years of your childs life. What amount do you need to save per year? ( Hint: Annuity formula can be used for this where the unknown is the amount of money to be deposited each year given a known present value (answer from 4b))
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