Question

I am buying a new house today and plan to make some updates and fixes to the new place over the next four years.

Expenses include:

$1,000 for an electric dog fence, installed today but payment is not due until two years from now

$8,000 for new laminate flooring in much of the house, installed now and payment is due now

$12,000 for a new shower and master bath - will wait four years to do this install and pay cash at that time

$500 to add electrical outlets to the unfinished basement - will complete in two years, and pay cash at that time

$5,000 to demo old concrete patio and replace with paver patio including built-in seating and a fire pit - will complete in four years and pay cash at that time

Create a spreadsheet to calculate the amount of money I will need to have on hand today in order to make the expected payments over the next four years. My time value of money is 5%.

Answer 1

i=5%

Pls find the sheet below

Year	Payment due	PV Factor	PV Amount	Remarks
0	-8000	1	-8,000.00	For laminate flooring
1		0.952380952	0.00
2	-1500	0.907029478	-1,360.54	For electric fence & Electric Outlets
3		0.863837599	0.00
4	-17000	0.822702475	-13,985.94	For Shower & Patio
			-23,346.49

Total amount needed today to complete these upgrade = 23,346.49

Showing formula in excel

Year	Payment due	PV Factor	PV Amount	Remarks
0	-8000	=1/(1+0.05)^A2	=B2*C2	For laminate flooring
1		=1/(1+0.05)^A3	=B3*C3
2	=-1000-500	=1/(1+0.05)^A4	=B4*C4	For electirc fence & Electric Outlets
3		=1/(1+0.05)^A5	=B5*C5
4	=-12000-5000	=1/(1+0.05)^A6	=B6*C6	For Shower & Patio
			=SUM(D2:D6)