Parents wish to have $140,000 available for a child's education. If the child is now 10 years old, how much money must be set aside at 5% compounded semiannually to meet their financial goal when the child is 18?

Parents wish to have $140,000 available for a child's education. If the child is now 10 years old, how much money must be set aside at 5% compounded semiannually to meet their financial goal when the child is 18?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are 35 years old and work with an institution where the retirement age is 65 years. For your retirement planning, you wish that from age 66 through 85, you should receive an annual sum of $50,000 at the end of each year. For this purpose, you will invest the required amount of money at retirement age. How much should you save at the end of each year from year 36 through 65 such that you have the amount of money, which if invested at your retirement age, will result in you receiving a sum of $50,000 each year from age 66 through 85? Assume an average interest rate of 6% throughout. Hint: Work the problem backwards. First solve the part from age 66 through 85. Then solve the part from age 36 to 65.
A couple plans to save for their child's college education. What principal must be deposited by the parents when their child is born in order to have $41,000 when the child reaches the age of 18? Assume the money earns 5% interest, compounded monthly. (Round your answer to two decimal places.)
Parents wish to have $160,000 available for a child education. If the child is now eight years old, how much money must be set aside at 7% compounded semi annually to meet their financial goal when the child is 18? The amount that should be set aside is $___ (Round up to the nearest dollar.)
A couple plans to save for their child's college education. What principal must be deposited by the parents when their child is born in order to have 39,000$ When the child reaches the age of 18? Assume the money earns 7% interest, compounded quarterly.?round your answer to two decimal places.
Parents wish to have 140,000 available for a child’s education. If the child is now 5 years old, how much money must be set aside at 7% compounded semiannually to meet their financial goal when the child is 18
It is Jerry's 14th birthday and his parents plan to invest some money so that they will have $17 000 on Jerry's 18th birthday for his post-secondary education. They invest in an RESP that pays 8.6% per year, compounded quarterly. How much money must Jerry's parents invest now to reach their goal?
New parents wish to save for thier newborn's education and wish to have $36,000 at the end of 18 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 5.6% compounded annually? (round your answer to two decimal places). How much interst would they earn over the life of the account? Determine the value of the fund after 12 years.
Parents wish to have 90,000 available for a child’s education.if the child is now 4 years old, how much money must be set aside at 5% compounded semiannually to meet their financial goal often the child is 18
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Assume the total cost of a college education will be $350,000 when your child enters college in 15 years. You presently have $67,000 to invest.What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?
A couple is planning to finance its three-year-old son's university education. Money can be deposited at 10% compounded quarterly. What quarterly deposit must be made from the son's 3rd birthday to his 18th birthday to provide $8000 on each birthday from the 18th to the 21st? (Note that the first deposit is made three months after the 3rd birthday and the last deposit is made on the date of the first withdrawal.) Answer:
A grandfather agrees to start contributing $2,500.00 to an educational savings account starting with the 8th birthday of his granddaughter. His last payment is on her 18th birthday at which point she starts a 4 year college program. How much can she afford drawing from this account at the end of each study year until she graduates? The account makes 5.5% per year.

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