1. You want to accumulate enough money over the next 10 years to pay for your so

Question

1. You want to accumulate enough money over the next 10 years to pay for your son’s college. The total costs in 10 years are expected to be $200,000 that you want to pay in advance before the first semester. You currently have $10,000 that you plan to invest over the next 10 years to help pay for college costs. You want to put away an equal, end-of-year amount into an investment account at the end of each of the next 10 years. Earnings on all of the investments are expected to be 7% for the first 5 years and 9% thereafter. What equal, end-of-year amount must you save each year over the next 10 years to meet these needs? (Hint: Use Excel Solver or Goal Seek function) (30 points) THIS MUST BE SHOWN IN EXCEL, PLEASE ATTACH EXCEL SPREADSHEET

Explanation / Answer

Amount is $12,028.65

Year Contribution Interest Rate Amount 1        10,000.00 1.07      10,700.00 2        12,028.65 1.07      24,319.66 3        12,028.65 1.07      38,892.69 4        12,028.65 1.07      54,485.83 5        12,028.65 1.07      71,170.49 6        12,028.65 1.09      90,687.07 7        12,028.65 1.09    111,960.13 8        12,028.65 1.09    135,147.77 9        12,028.65 1.09    160,422.30 10        12,028.65 1.09    187,971.54        12,028.65 1    200,000.19

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