This is PART 1 of a 6 PART QUESTION. John and Daphne are saving for their daughter Ellen's college education Ellen just turned 10 (at t = 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at Culver University are currently $14,500 a year, but they are expected to increase at a rate of 3.5% a year. Ellen should graduate in 4 years-if she takes longer or wants to go to graduate school, she will be on her own (No parent should have to support the grad school delusions of their childrenIII). Tuition and other costs will be due at the end of each school year (at t = 8, 9, 10, and 11). 1. Estimate what the cost of each year of college will be. (Hint: college happens att = 8,9,10,11). Round the nearest cent Freshman Year Sophomore Year Junior Year Senior Year THIS IS PART 2 OF A 6 PART QUESTION. 2. What will be the Present Value of college tuition right before Ellen starts school? The family's interest rate is 7.7%. Round to the nearest cent. (Hint, calculate the present value of each cash flow from the previous question back to t = 7 so that each cash flow is discounted with N =t-7 Answer: This is PART 3 of a 6 PART QUESTION. So far, John and Daphne have accumulated $11207 in their college savings account that earns 5.4% (at t = 0) 3. What is the Future Value of their current savings right before Ellen starts college? Round to the nearest cent. (Hint, the future value at N = 7) N 1 THIS IS PART 4 OF A 6 PART QUESTION. 4. Their long-run financial plan is to add an additional $2785 in each of the next 4 years that will earn 9.7% (at t = 1, 2, 3, and 4). What is the future value of this account before Ellen start college? Round to the nearest cent. (Hint: calculate the future value of the 4 annuity payments with N = 4. Then treat the result as a present value that you compound at the same rate for an additional 3 years) Answer: THIS IS PART 5 OF A 6 PART QUESTION. 5. What is the difference between what John and Daphne need and what they planned to have saved? Hint (Q2 - Q3 - Q4) Answer: THIS IS PART 6 OF A 6 PART QUESTION. 6. How large must the annual payments at t = 5,6,7 be to cover Ellen's anticipated college costs? Use 9.5% as the interest rate. Round to the nearest cent. (Hint: use Q5 as the Future Value)