Please present the work neatly and answer the full question . Provide explanatio

Question

Please present the work neatly and answer the full question. Provide explanations for the answers PLEASE!

Question 4(b) Assume that it costs $15,000 per academic year now (in 2018 year dollars) for tuition. a) If inflation averages 3% per year, and tuition is expected to increase at the rate of inflation, what is the cost per year of a four-year college education for a student who will be starting college in Fall 2028 (i.e. 10 years from now). Assume tuition for the academic year is paid in full at the start of each academic year. (10 points) b) Starting in September 2018 (10 years before starting college), how much should be saved each month if the savings account earns 6% per year compounded monthly (0.5% per month) if the account is to have sufficient funds by the end of August 2028 to cover the cost of 4 years of tuition. Draw a cash flow diagram to use with your analysis. (15 points).

Explanation / Answer

ROW NUMBER > A B C D COLUMN NUMBER solution a 1 CURRENT COST p.a 15000 2 Number of years 10 academic year 1 it takes 10 year to pay 1st fee 3 11 academic year 2 it takes 11 year to pay 2nd fee 4 12 academic year 3 it takes 12 year to pay 3rd fee 5 13 academic year 4 it takes 13 year to pay 4th fee 6 inflation rate 3.00% 7 8 assuming tuition for academic year is paid in full at the start of each academic year - 9 10 academic year $ FV(rate,nper,pmt,pv,type) 11 1 20158.75 FV($B$6,B2,0,-$B$1,1) 12 2 20763.51 FV($B$6,B3,0,-$B$1,1) 13 3 21386.41 FV($B$6,B4,0,-$B$1,1) 14 4 22028.01 FV($B$6,B5,0,-$B$1,1) 15 Type 1 = begin mode 16 solution b 17 interest rate p.m= 0.50% 18 how much should be saved each month , to have sufficient funds by the end of August 2028to cove the cost of 4years of tuition 19 $ 20 amount to be collected for tuition fees for 4 years on 2028 august = 84336.68 (20158.75+20763.51+21386.41+22028.01) 21 number of months Left to collect the amount= 12*10years 120 months 22 how much to save at the beginning of every month = 512.07 PMT(B17,C21,0,-B20,1) pmt(rate; nper ;pv;fv;type) 23 how much to save at the end of every month = 514.63 PMT(B17,C21,0,-B20,0) 24 cashflow= 25 month invested Amount ($) fv factor fv(rate;nper;pmt;pv;type) 26 120 512.07 $931.66 FV($B$17;A26;0;-B26;1) 27 119 512.07 $927.02 28 118 512.07 $922.41 29 117 512.07 $917.82 30 116 512.07 $913.26 31 115 512.07 $908.71 32 114 512.07 $904.19 33 113 512.07 $899.69 34 112 512.07 $895.22 35 111 512.07 $890.76 36 110 512.07 $886.33 37 109 512.07 $881.92 38 108 512.07 $877.53 39 107 512.07 $873.17 40 106 512.07 $868.82 41 105 512.07 $864.50 42 104 512.07 $860.20 43 103 512.07 $855.92 44 102 512.07 $851.66 45 101 512.07 $847.43 46 100 512.07 $843.21 47 99 512.07 $839.01 48 98 512.07 $834.84 49 97 512.07 $830.69 50 96 512.07 $826.55 51 95 512.07 $822.44 52 94 512.07 $818.35 53 93 512.07 $814.28 54 92 512.07 $810.23 55 91 512.07 $806.20 56 90 512.07 $802.19 57 89 512.07 $798.19 58 88 512.07 $794.22 59 87 512.07 $790.27 60 86 512.07 $786.34 61 85 512.07 $782.43 62 84 512.07 $778.54 63 83 512.07 $774.66 64 82 512.07 $770.81 65 81 512.07 $766.97 66 80 512.07 $763.16 67 79 512.07 $759.36 68 78 512.07 $755.58 69 77 512.07 $751.82 70 76 512.07 $748.08 71 75 512.07 $744.36 72 74 512.07 $740.66 73 73 512.07 $736.97 74 72 512.07 $733.31 75 71 512.07 $729.66 76 70 512.07 $726.03 77 69 512.07 $722.42 78 68 512.07 $718.82 79 67 512.07 $715.25 80 66 512.07 $711.69 81 65 512.07 $708.15 82 64 512.07 $704.62 83 63 512.07 $701.12 84 62 512.07 $697.63 85 61 512.07 $694.16 86 60 512.07 $690.71 87 59 512.07 $687.27 88 58 512.07 $683.85 89 57 512.07 $680.45 90 56 512.07 $677.06 91 55 512.07 $673.69 92 54 512.07 $670.34 93 53 512.07 $667.01 94 52 512.07 $663.69 95 51 512.07 $660.39 96 50 512.07 $657.10 97 49 512.07 $653.83 98 48 512.07 $650.58 99 47 512.07 $647.34 100 46 512.07 $644.12 101 45 512.07 $640.92 102 44 512.07 $637.73 103 43 512.07 $634.56 104 42 512.07 $631.40 105 41 512.07 $628.26 106 40 512.07 $625.13 107 39 512.07 $622.02 108 38 512.07 $618.93 109 37 512.07 $615.85 110 36 512.07 $612.78 111 35 512.07 $609.74 112 34 512.07 $606.70 113 33 512.07 $603.68 114 32 512.07 $600.68 115 31 512.07 $597.69 116 30 512.07 $594.72 117 29 512.07 $591.76 118 28 512.07 $588.82 119 27 512.07 $585.89 120 26 512.07 $582.97 121 25 512.07 $580.07 122 24 512.07 $577.18 123 23 512.07 $574.31 124 22 512.07 $571.46 125 21 512.07 $568.61 126 20 512.07 $565.78 127 19 512.07 $562.97 128 18 512.07 $560.17 129 17 512.07 $557.38 130 16 512.07 $554.61 131 15 512.07 $551.85 132 14 512.07 $549.10 133 13 512.07 $546.37 134 12 512.07 $543.65 135 11 512.07 $540.95 136 10 512.07 $538.26 137 9 512.07 $535.58 138 8 512.07 $532.91 139 7 512.07 $530.26 140 6 512.07 $527.63 141 5 512.07 $525.00 142 4 512.07 $522.39 143 3 512.07 $519.79 144 2 512.07 $517.20 145 1 512.07 $514.63 146 $84,337.29

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