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

I am buying a new house today and plan to make some updates and fixes to the new place over the next four years.

Expenses include:

$1,000 for an electric dog fence, installed today but payment is not due until two years from now

$8,000 for new laminate flooring in much of the house, installed now and payment is due now

$12,000 for a new shower and master bath - will wait four 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

$5,000 to demo old concrete patio and replace with paver patio including built-in seating and a fire pit - will complete in four 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 four years. My time value of money is 5%.

Please show to solve in excel.

Solutions

Expert Solution

I am attaching the screen shot of Excel sheet for your reference

I have shown the formula used in each calculation. Amount that should be in hand today is equal to present value of expected future cash flows. It can be done by two functions, PV and NPV. I have shown the calculations by using both formulas.

Rahul Sunny answered 1 year ago

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