Time Value of Money

Alex is a person that likes to plan for the future. He plans to add money to his savings account over the next 10 years so that he can take his family on a vacation.

Wendy just welcomed a new baby to her family. She has a goal to send the baby to college in 18 years. She estimates that the average inflation rate is 3% and believes that she can get an annual return of 6% for the next 18 years. She currently has $10,000 in her saving account.

This challenge runs through several scenarios to assess the feasibility of saving for Alex’s trip in 10 years and Wendy’s goal to support her child’s education in 18 years.

Note that when cash flows out, the figure should be negative. For example, a payment to a savings account is cash you plan not to spend, so it is an outflow. Put a negative sign in front of the cell reference in the calculations.