ass11_due111108

ass11_due111108 - ISE460 Fall 2008 Due(Team Assignment...

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ISE460 Fall 2008 Session 21 11/05/08 Assignment 11 Due 11/11/08 (Team Assignment) No. 1 (2 point) A father wants to save for his 8-year-old son’s college expenses. The son will enter college 10 years from now. An annual amount of \$40,000 in constant dollars will be required to support the son’s college expenses for 4 years. Assume that these college payments will be made at the beginning of the school year. The future general inflation rate is estimated to be 5% per year, and the market interest rate on the savings account will average 7% compounded annually. Given this information, (a) What is the amount of the son’s freshman-year expense in terms of actual dollars? (b) What is the equivalent single-sum amount at the present time for these college expenses? (c) What is the equal amount, in actual dollars, the father must save each year until his son goes to college? No. 2 (2 points) Reproduce the spreadsheet in Example 10.6 , including all calculations required to obtain the numbers. Display your formulas either by copying them into comments, or by

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ass11_due111108 - ISE460 Fall 2008 Due(Team Assignment...

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