Question

Duration Ted and Alice Hansel have a son who will begin college 10 years from today. School expenses of $30,000 will need to be paid at the beginning of each of the four years that their son plans to attend college. What is the duration of this liability to the couple if they can borrow and lend at the market interest rate of 7.6 percent?

Annual College Number of Years Total College in College Rate Expenses Expenses $120,000.00 9% 30,000.00 4. PV Relative Weighted Present Value Year Payment to NPV Maturity 10 $ 11 $ Ted and Alice will borrow and 30,000.00 #VALUE! #VALUE! payout as shown in the following 30,000.00 #VALUE! #VALUE! 12 $ 13 $ #VALUE! #VALUE! 30,000.00 #VALUE! 30,000.00 #VALUE ! #VALUE! Years in duration of liability INPUT DATA HERE

**can you please show work and formula

Answer 1

B D A E 1 interest rate 0.076 2 3 Year Payment Present value PV relative to NPV weighted maturity 4 10 30000 14421.10508| 0.278101356 2.78101356 5 11 30000 13402.51402 0.258458509 2.843043602 30000 12455.86805 6 12 0.240203076 2.882436907 2.902081768 7 13 30000 11576.08554 0.223237059 51855.57269 11.41 10 11 Duration of liability 11.41 12

A B E interest rate 0.076 1 2 3 Year PV relative to NPV weighted maturity C4/$C$8 C5/$C$8 Payment Present value 4 10 B4/((1+$B$1)^A4) B5/((1+$B$1)^A5) B6/((1+$B$1)^A6) B7/((1+$B$1)^A7) =SUM(C4:C7) D4*A4 30000 5 11 30000 D5*A5 =C6/$C$8 =D6* A6 12 30000 6 C7/$C$8 7 13 =D7*A7 30000 8 =SUM(E4:E7) 9 10 11 Duration of liability =E8 12 13 14