Purpose of Assignment: Most of you
will be going to college and many of you will eventually have children and want
to send them to college. The purpose of
this exercise is to help you estimate the cost of college in 4 years and 30
years and identify various methods you could use to save for that education.
Tools: You will be
using Microsoft Excel to help you with the calculation of trends and with the
display of your results.
Assignment:
1. You will find
the cost of a college education for the last 20 years. This can be either for the college which you
plan to attend or the average cost of a college education. The cost will include the cost for the
tuition needed for the equivalence of 24 semester hours/year or 36 quarter
hours/year. The cost will also include
books and room and food. You may break
this information into three columns if that is easier for you.
2. Next to the
actual cost column, you will have a column that starts with the same cost as
the cost 20 years ago and uses a formula of the form y = abx to calculate
the following costs. The most recent
years of the exact data and the projection should be as close as possible.
3. Have three more
columns, each assuming a savings account that pays 3% interest per year
compounded continuously. The first one
needs to have how much you must invest per year starting now to have enough
money to pay for your children’s educations in 30 years. The second is the same, except starting in 5
years. The third is also the same,
except starting in 10 years.
4. Have a column
that contains the yearly closing values of the Dow Jones Industrial Average
(DJIA) for the past 20 years.
5. In a column
next to this, using the formula of the form y = abx to calculate the
closing DJIA for each year, trying to match the first and last years as closely
as possible). Continue this column for
the next thirty years.
6. Using the
column created in step 5, determine how much you would have to invest in the
stock market to have enough money to send your children to college in thirty
years.
7. Do the same as
steps 5 and 6 for real estate (perhaps use the average new home price 20 years
ago and the average used home price for the following 19 years.
8. Do the same for
government bonds.
9. Do the same for
average salaries in the field in which you would like your career to be.
10.Choose an
investment strategy of your own and do the same for it.
11.Have a two
page, double spaced write up (12 point Times Roman font) describing your
research and results. Include a
paragraph on what your conclusions are after doing this process.
Value: This project is
worth 150 points.
Date Due: 14 February 2005