Assume you have estimated expenses for a project of $20,000 if they occurred today. However, you will not have to make those payments for the next ten (10) years. Then, you must make these expense payments for the following five (5) years. The average cost today of the expense is $20,000. Assume you expect the cost to increase on an annual basis of 4.00%, and you can earn 7.50% on your annual investments.
How much would you forecast your expenses to be in Years 11, 12, 13, 14, and 15?If you were to invest a lump sum today to cover the expected expenses, how much would you have to invest today?Assuming that you plan to have enough money after investing for 10 years to cover all five years of expenses, how much capital do you need to have on 09/01/2035 to start making payments?What would the payments be if you choose to make 15 equal investments at the end of each year (Years 1 through 15)?What would the payments be if you choose to make 16 equal investments each year, starting today (Years 0 through 15)?What would the payments be if you choose to make 10 equal investments at the end of each year (Years 1 through 10)?What would the payments be if you choose to make 11 equal investments each year, starting today, (Years 0 through 10)?