A new mother would like to start a college fund for her newborn daughter. She makes quarterly deposits of$400 into a college fund that earns 6% compounded quarterly for the next 18 years.How much will her daughter have available in her college fund when she turns 18? $Round to the nearest dollarWhat is total amount the mother deposited into the fund over the 18 years? $Round to the nearest dollarHow much interest was earned over the 18 years? $Use the WHOLE DOLLAR AMOUNTS you entered in as your answers above.4Round to the nearest dollar

Time value of money :— According to this concept, value of money in present day is greater than the…

Answered: A new mother would like to start a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 33P

See similar textbooks

Similar questions

A couple wants to set up a college fund for their child. The fund will give the child $1,000 per month for 48 months. The first withdrawal will occur when the child turns 18 years old. Assume that the college fund will earn j12=6%. a) How much money will need to be in the account on the child's 18th birthday in order to sustain the withdrawals? b) How much money should be set aside to establish the fund on the child's first birthday?
A man needs to set up a 529 colleges saving account for his granddaughter. How much will he need to deposit each year in order to have 80000 saved up for when she goes to college in 17 years, assuming the account earns 6% return.
Assume the total cost of a college education will be $525,000 when your infant child enters college in 17 years. Your are fortunate in that your uncle has just given your child a $25,000 gift to start the college fund. How much do you have to invest at the end of each month in order to accumulate the required $525,000 at the end of 17 years if your monthly investments earn an annual interest rate of 3.5 percent, compounded monthly?
1) Suppose that you want to create a "college fund" for your newborn child and place $300 in a bank account at the end of each of the next 20 years. If that account earns an annual rate of return of 7%, how much will be in that account at the end of the twentieth year? A) $13,420.00 B) $12,977.53 C) $13,178.20 D) $11,828.32 E) $12,298.65
Your parents start saving for your sister's college education. She will begin college at age 18 and will need $4,000 per year at the end of each of the next 4 years. They will make a deposit one year from today in an account which pays 6% compounded annually, and an identical deposit each year including the year she starts college. If a deposit of $1,987 will allow them to reach their goal, how old is your sister now?
A man wants to set up a 529 college savings account for his granddaughter. How much would he need to deposit each year into the account in order to have $40,000 saved up for when she goes to college in 16 years, assuming the account earns a 4% return.
Suppose that a young couple has just had their first baby and they wish to insure that enough money will be available to pay for their child's college education. They decide to make deposits into an educational savings account on each of their daughter's birthdays, starting with her first birthday. Assume that the educational savings account will return a constant 4% per year. The parents deposit $ 10,000 on their daughter's first birthday and plan to increase the size of their deposits by 2% each year. Assuming that the parents have already made the deposit for their daughter's 18th birthday, then the amount available for the daughter's college expenses on her 18th birthday is closest to: $1,012,908 $ 147,489 $500,000 $298,785
You are saving for the college education of your two children. They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $45,000 per year per child, payable at the beginning of each school year. The annual interest rate is 5 percent. How much money must you deposit in an account each year to fund your children’s education? Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college.
New parents wish to save for their newborn's education and wish to have $35,000 at the end of 16 years. How much should the parents place at the end of each year into a savings account that eans an annual rate of 6% compounded annually? (Round your answers to two decimal places.) $ How much interest would they earn over the life of the account? $ Determine the value of the fund after 12 years. %24
A couple wants to begin saving money for their daughter's education. $16,000 will be needed on the child’s 18th birthday, $18,000 on the 19th birthday, $20,000 on the 20th birthday, and $22,000 on the 21st birthday. Assume 5% interest with annual compounding. The couple is considering two methods of accumulating the money. a. How much money would have to be deposited into the account on the child's first birthday to accumulate enough money to cover the education expenses? (Note: A child’s “first birthday” is celebrated 1 year after the child is born.) b. What uniform annual amount would the couple have to deposit each year on the child’s first through seventeenth birthdays to accumulate enough money to cover the education expenses?
Juanita Domingo's parents want to establish a college trust for her. They want to make 16 quarterly withdrawals of $2500, with the first withdrawal 3 months from now. If money is worth 6.1%, compounded quarterly, how much must be deposited now to provide for this trust?
Suppose that a young couple has just had their first baby and they wish to insure that enough money will be available to pay for their child's college education. They decide to make deposits into an educational savings account on each of their daughter's birthdays, starting with her first birthday. Assume that the educational savings account will return a constant 7%. The parents deposit $2000 on their daughter's first birthday and plan to increase the size of their deposits by 5% each year. Draw a timeline that details the amount that would be available for the daughter's college expenses on her 18th birthday, and identify the amount she would have for college.

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Excel Applications for Accounting Principles

Accounting

ISBN:

9781111581565

Author:

Gaylord N. Smith

Publisher:

Cengage Learning

SWFT Comprehensive Volume 2019

Accounting

ISBN:

9780357233306

Author:

Maloney

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Excel Applications for Accounting Principles

Accounting

ISBN:

9781111581565

Author:

Gaylord N. Smith

Publisher:

Cengage Learning

SWFT Comprehensive Volume 2019

Accounting

ISBN:

9780357233306

Author:

Maloney

Publisher:

Cengage

SWFT Comprehensive Vol 2020

Accounting

ISBN:

9780357391723

Author:

Maloney

Publisher:

Cengage

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

SWFT Individual Income Taxes

Accounting

ISBN:

9780357391365

Author:

YOUNG

Publisher:

Cengage

SEE MORE TEXTBOOKS