The parents of a newborn baby would like to put money away today to cover 100% of the child's expected total 4 - years of college tuition. The first tuition payment is due exactly 18 years from today, and the next three payments are due at the end of years 19, 20 and 21. Suppose that the parents estimate that the cost of tuition will be $86, 000 per year for the first three years, but that the fourth year's tuition will be $96,000. Which comes closest to the amount of money that needs to be set aside today if the interest rate is 6% ? A. $ 104,719 B. $ 136, 639 C. $ 16,857 D. $ 113,608 E. $ 198,781

The parents of a newborn baby would like to put money away today to cover 100% of the child's expected total 4 - years of college tuition. The first tuition payment is due exactly 18 years from today, and the next three payments are due at the end of years 19, 20 and 21. Suppose that the parents estimate that the cost of tuition will be $86, 000 per year for the first three years, but that the fourth year's tuition will be $96,000. Which comes closest to the amount of money that needs to be set aside today if the interest rate is 6% ? A. $ 104,719 B. $ 136, 639 C. $ 16,857 D. $ 113,608 E. $ 198,781

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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Similar questions

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 $40,000 when the child reaches the age of 18? Assume the money earns 7% interest, compounded quarterly. (Round your answer to two decimal places.)
You are thinking of buying a house beside the College which you will rent to students. You expect to receive $2,000 a month in rental income. Your real estate agent estimates that you will be able to sell the property for $250,000 at the end of 46 months. You'd like a return of at least 0.2% per month. What is the most that you should pay for the house, assuming that you will purchase the house today and receive the first (beginning of month) rental payment today. What is the most that you should pay for the property today? (Round to the nearest dollar.)
You are setting up an education fund for your new baby. You want your child to be able to withdraw the equivalent of $15,000 in today's dollars per year for each of the 5 years they will spend at University. You assume that they will begin at University on their 18th birthday, and you want to make the first yearly deposit on their first birthday and the last on their 18th birthday. If inflation is expected to be 7% and interest earned on your investments is expected to be 12%, what is the amount of the equal, annual deposits required?
Jan wants to plan for her daughter's education. Her daughter, Rachel was born today and will go to college at age 18 for five years. Tuition is currently $15,000 per year, in today's dollars. Jan anticipates tuition inflation of 6% and believes she can earn an 11% return on her investment. How much must Jan save at the end of each year, if she wants to make her last payment at the beginning of her daughter's first year of college? $4,680.37 $7,334.72 $3,882.03 $2,547.54
You are saving for the university education of your two children. They are two years apart in age; one will begin university 15 years from today and the other will begin 17 years from today. You estimate your children's university expenses to be $45,000 per year per child, payable at the beginning of each school year. The annual interest rate is 7.5 percent. Your deposits begin one year from today. You will make your last deposit when your older child enters university. Assume four years of university. How much money must you deposit in an account each year to fund your children's education? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Annual savings $
Your daughter wants to the University of Cincinnati. She is already planning to start in 10 years (which is when her first tuition payment is due). Her tuition will be $19,886 per year for four years. The relevant discount rate is 8.01 percent per year. You plan to save for her education by setting aside the same amount of money per year for 9 years. What is the amount you need to save per year if you start saving at the end of this year? O $32,914.10 O $5,271.07 $3,657.12 $30,473.20 O $7,316.70
Your daughter is expected to the university next year. It is estimated that she will need 10,000 each year for the for years university education. You are planning to deposit a lump sum in an account that will yield 10% per anum to cater for her university education. How much should be deposited?
If the average college tuition cost is $40,000/year currently to go to college, what will it cost for your children in 2045 for a 4-year degree if the inflation rate is 4% per year until then
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?
You and your sister are planning a large anniversary party 3 years from today for your parents' 50th wedding anniversary. You have estimated that you will need $6,500 for this party. You can earn 2.6 percent compounded annually on your savings. How much would you and your sister have to deposit today in one lump sum to pay for the entire party? Can the excel and calculator solution be provided?
You plan to buy property in Florida 8 years from today. To do this, you estimate that you will need $ 45000 at that time for the purchase. You would like to accumulate these funds by making equal annual deposits into your savings account, which pays 9% annually. If you make your first deposit at the end ofthis year, and you would like your accountto reach$ 45000 when the final deposit is made, what amount do you need to deposit annually?
B) Pinky's father is planning to admit her in a reputed university 5 years from now. Pinky is currently 15 years old; she will enroll in a university 5 years later and should graduate within 4 years. They are anticipating after 5 years the annual cost (for everything tuition fee, books) will be BDT 1, 40,060 but this cost is expected to increase by 4% annually. Universities accept the total payment in advance at the beginning of the year. Pinky currently has a saving account with BDT 100,000 in it which pays 9% interest annually. Her father is planning to make five equal annual deposit to her account; The first deposit will be made today. How large each of the annual deposit should be?

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