Reference no: EM132499653

The recorded session, provides a good overview on working this problem and I use the "A Number of Useful Financial Spreadsheets" to work a very similar problem. Use the spreadsheet as your template but you may have to change calculated cells. I have not set this problem up so you can just enter the numbers and the spreadsheet calculates answer for you.

The problem you will answer has the following fact pattern:

A couple has just given birth to a baby and named him Jimmy. They want to set up a college savings account for Jimmy and start saving for his college education. The following facts will help you work this problem:

Current Cost of Tuition, Room & Board                                                            $25,000

Expected Average Inflation for College Costs 5% (My example in the lecture used 4%)

Expected Average Percentage Return on Savings                                                      4%

Years until you need the first tuition payment                                                            18

You will make 18 yearly payments with the first payment starting a year from now.

Question 1: How much will the couple need at the end of 18 years to fund Jimmy's college education for 4 years? Round your answer to a whole number (Example 150450.61 rounded to 150451 with no commas or dollar signs).