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) |

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