I am buying a new house today and plan to make some updates and fixes to the new

Question

I am buying a new house today and plan to make some updates and fixes to the new place over the next five years. Expenses include: $2,000 for an electric dog fence, installed today but payment is not due until one year from now $8,000 for new laminate flooring in much of the house, installed now but payment is not due until one year from now $2000 for a new shower in the master bath - will wait three years to do this install and pay cash at that time $500 to add electrical outlets to the unfinished basement - will complete in two years, and pay cash at that time $5000 to demo old concrete patio and replace with paver patio including built-in seating and a fire pit - will complete in five years and pay cash at that time Create a spreadsheet to calculate the amount of money I will need to have on hand today in order to make the expected payments over the next five years. My time value of money is 1.1%. Create an .xls file to solve OR capture an image of your "by hand" work and upload here

I am buying a new house today and plan to make some updates and fixes to the new place over the next five years. Expenses include: $2,000 for an electric dog fence, installed today but payment is not due until one year from now $8,000 for new laminate flooring in much of the house, installed now but payment is not due until one year from now $2000 for a new shower in the master bath- will wait three years to do this install and pay cash at that time $500 to add electrical outlets to the unfinished basement - will complete in two years, and pay cash at that time $5000 to demo old concrete patio and replace with paver patio including built- in seating and a fire pit - will complete in five years and pay cash at that time Create a spreadsheet to calculate the amount of money I will need to have on hand today in order to make the expected payments over the next five years. My time value of money is 1.1%. Create an xls file to solve OR capture an image of your "by hand" work and upload here

Explanation / Answer

ANSWER:

I = 1.1%

N = 5 YEARS

PV = cash flow in year 1(p/f,i,n) + cash flow in year 2(p/f,i,n) + cash flow in year 3(p/f,i,n) + cash flow in year 5(p/f,i,n)

pv = 10,000(p/f,1.1%,1) + 500(p/f,1.1%,2) + 2,000(p/f,1.1%,3) + 5,000(p/f,1.1%,5)

pv = 10,000 * 0.9891 + 500 * 0.9784 + 2,000 * 0.9677 + 5,000 * 0.9468

pv = $9,891 + $489.18 + $1,935.43 + $4,733.85

pv = $17,049.65

so the amount that i need today is $17,049.65

YEAR 0 1 2 3 4 5 ELECTRIC DOG FENCE COSTS 2000 LAMINATE FLOORING COSTS 8000 SHOWER COST 2000 ELECTRICAL OUTLETS COST 500 CONCRETE PATIO COST 5000 CASH FLOWS 0 10000 500 2000 0 5000

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.