Question
1. Carol just entered college. Her grandparents have promised to giver her $25,000 toward a new car if she graduates in 4 years. Alternatively, if
1. Carol just entered college. Her grandparents have promised to giver her $25,000 toward a new car if she graduates in 4 years. Alternatively, if she takes 5 years to graduate, they offered her $5000 each year starting after her second year is complete and an extra $5000 when she graduates. Draw the cash flow diagrams first. Then, use i = 8% per year to show Carol how to use spreadsheet functions to determine the following for each gift her grandparents offered: (Do this on excel and show the formulas used)
a. Present Worth P now
b. Future Worth F five years from now
c. Equivalent annual amount A over a total of 5 years
d. Number of years it would take Carol to have $25,000 in hand for the new car if she were able to save $5000 each year starting next year.
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