Description

After finishing high school, Darlene is planning to work for 5 years and then go to university for 4 years to get a degree in business. She estimates that her annual expenditures (tuition plus other expenses) when she starts university will be $6500, $5500, $4550 and $5750, from years 6 to 9 respectively, for the four years she plans to be there.

Darlene needs a spreadsheet model that will help her figure out how much to save for her university education. She estimates that her savings account will generate 4.5% in interest returns.

Answer all the question

What is today's present value ( PV at time t=O ) of the estimated university expenditures if the expenditures are made at the end of each year? A If Darlene were to make a fixed deposit at the end of each year starting at the end of Year 1 until the year she starts university, how much will she need to deposit into her savings account each year? A Question 2 (Mandatory) (5 points) Instead of saving, Darlene is considering borrowing the money (taking out student loans each year) to pay for her university education. If she borrows the money at 4.5% and plans to pay it all back at the end of her university education, how much would she owe at the end of her university education (Year 9) if the university expenditures are made at the end of each year? A How much would she owe at the end of Year 9 if the university expenditures are made at the beginning of each year? A Question 3 (Mandatory) (4 points) If Darlene makes an initial deposit of $2500 into her savings account today and then makes fixed deposits at the end of each year until the year she starts university, how much will she then need to deposit into her savings account each year if the university expenditures are made at the end of each year? A \begin{tabular}{|c|c|c|} \hline Inputs & & \\ \hline Interest Rate & & \\ \hline Initial Deposit & & \\ \hline & Cash & ws \\ \hline Year & Expenditures & Savings \\ \hline 0 & & \\ \hline 1 & & \\ \hline 2 & & \\ \hline 3 & & \\ \hline 4 & & \\ \hline 5 & & \\ \hline 6 & 6500 & \\ \hline 7 & 5500 & \\ \hline 8 & 4550 & \\ \hline 9 & 5750 & \\ \hline Present Value (t=0) & & \\ \hline Future Value (t=9) & & \\ \hline Ann. Savings (t=1-5) & & \\ \hline Other? & & \\ \hline Other? & & \\ \hline Other? & & \\ \hline \end{tabular}