Question

please answer all

1. Help the Sampsons determine how much they will have for the children's education by calculating how much $3,600 in annual savings will accumulate to if they earn interest of (a) 2 percent and (b) 5 percent. Next, determine how much $4,800 in annual savings will accumulate to if they earn interest of (a) 2 percent and (b) 5 percent. Savings Accumulated Over the Next 12 Years (Based on Plan to Save $3,600 per Year at 27 or 57) Amount Saved Per Year Interest Rate Years Future Value of Savings $0.00 $0.00 Savings Accumulated Over the Next 12 Years (Based on Plan to Save $4,800 per Year at 27. or 52) Amount Saved Per Year Interest Rate Years Future Value of Savings $0.00 $0.00 2. What is the impact of the higher interest rate of 5% (instead of 2%) on the Sampsons' accumulated savings? 3. What is the impact of the higher savings of $4,800 (instead of $3,600) on their accumulated savings? 4. If the Sampsons set a goal to save $70,000 for their children's college education in 12 years, how would you determine the yearly savings necessary to achieve this goal? How much would they have to save by the end of each year to achieve this goal, assuming a 5 percent annual Calculator: Savings Needed Each Year Future Savings Goal Interest Rate Years Savings Needed Each Year $0.00

Answer 1

SOLUTION:-

Amount Saved Per Year	3600	3600	Impact
Interest Rate	0.02	0.05
Years	12	12
Future Value of Savings	$48,283.52	$57,301.66	$9,018.13
Amount Saved Per Year	4800	4800
Interest Rate	2%	5%
Years	12	12
Future Value of Savings	$64,378.03	$76,402.21	$12,024.18

Future Value	$70,000
Interest Rate	5%
Years	12
Savings Needed Each Year	$4,397.78

Workings

AutoSave © of HO- Book1 - Excel Sign in - File Home Insert Draw Page Layout Formulas Data Review View Help O Tell me what you want to do co = = open alle Calibri BI U - -10 - - A À = - A - E General $ - % Insert Delete - Format Share E. As T ZY U Sort & Find & Filter - Select Paste - Conditional Format as Formatting Table Cell Styles Clipboard Font Alignment Number Styles Cells Editing A14 Amount Saved Per Year Α Impact B 3600 0.02 12 =FV(B15,B16,-B14) 3600 0.05 12 =FV(C15, C16,-C14) =C17-B17 14 Amount Saved Per Year 15 Interest Rate 16 Years 17 Future Value of Savings 18 19 Amount Saved Per Year 20 Interest Rate 21 Years 22 Future Value of Savings 23 4800 0.02 12 =FV(B20,B21,-B19) 4800 0.05 12 =FV(C20,C21,-C19) =C22-B22 24 25 Future Value 26 Interest Rate 27 Years 70000 0.05 12 Savings Needed Each Year =PMT(B26,827,-B25) 30