Using Excel, answer the question:

Jenny's parents decide to deposit $6,000 in a savings account over the next 10 years for Jenny's university education.

The accounts balance will earn 8% per year.

After 10 years, Jenny plans to attend a four-year university degree program at Huntsville University.

For the university tuition, Jenny's parents will need to withdraw $25,000 each year.

Questions

Consider the following scenarios:

Scenario 1:

All payments are made at the beginning of the year.

Annual saving and annual tuition expense do not vary over the years.

1.1 Is the yearly saving sufficient to cover the tuition expenses? If yes, by how much? If not, what is the difference?

Scenario 2:

All payments are made at the end of the year.

Initial annual saving is $8000, however in each successive year Jenny's parents contribute 5% more than the previous year.

Also, the first-year tuition fee is $25,000, and it will increase by 4% in the subsequent years.

1.2 Is the yearly saving sufficient to cover the tuition expenses? By how much?

1.3 For what annual percentage increment in deposit over the years (currently it is 5% as stated in scenario 2), there will be just enough funds to cover the tuition cost? Still tuition fee will increase by 4% in the subsequent years.

Scenario 3:

Jenny's parents decide to deposit in a savings account till Jenny finishes her university education. All payments are made at the end of the year. Initial annual saving is $8000, however in each successive year Jenny's parents contribute 5% more than the previous year.

The first-year tuition fee is $30,000, and it will increase by 4% in the subsequent years. Also, assume that Jenny would receive a scholarship worth $2000 each year (for four years).

1.4 Is the yearly saving sufficient to cover the tuition expenses? Yes, or no? By how much?