Question

In: Finance

After 18 years, how much money will we have for the university education for our 3...

After 18 years, how much money will we have for the university education for our 3 children? If we invest in the given below option:

Current savings to be invested = $20,000

semi-monthly contribution of $150 at the end of each period, set aside for the next 18 years = $150 (semi-monthly contribution)

average annual rate of return compounded semi-monthly = 8%

Please use (display + name) the excel function/ formula for all questions

Ans. University savings plan
APR	8.00%
period rate
current savings
semi-monthly contributions	-$150.00
#periods
Amount available after 18 years:

Q2)

We have 3 children. Our objective is to give each child $25,000 at the beginning of each year of their engineering college ($75,000 in total per year) for 4 years. How much money would we need to have available in our university education savings fund 18 years from now based on an annual interest rate of 8%? (Also compounded semi-monthly).

Please use (display + name) the excel function/ formula for all questions

Ans 2. money needed in fund
period rate
payments	-$75,000.00
#periods
Amount needed 18 years from now:

Ques 3. If our semi-monthly contribution of $150 is not enough to meet our target, how much would we have to contribute to the university savings fund on a semi-monthly basis? (to have the required amount needed when children start college).

Please use (display + name) the excel function/ formula for all questions

Ans 3. required contribution
period rate
#periods


Required semi-monthly contribution:

Expert Solution

Ans. University savings plan
APR	8.00%
period rate	0.3333%
current savings	-20000
semi-monthly contributions	($150.00)
#periods	432
Amount available after 18 years:	$228,689.05

Ans 2. money needed in fund
period rate	0.0816
payments	($75,000.00)
#periods	4
Amount needed 18 years from now:	$267,725.62

Ans 3. required contribution
APR	8.00%
period rate	0.3333%
current savings	-20000
Amount required after 18 years:	$267,725.62
#periods	432
semi-monthly contributions	($190.53)

Workings

jeff jeffy answered 1 week ago

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