Two wealthy grandparents want to set aside a large sum of money today in order to pay for their granddaughter'sprivate school tuition. Their granddaughter will start school five years from now, and the grandparents will have to covertwelve years of tuition (1st grade through 12th grade). Tuition is expected to cost $17,500 per year, and interest ratesare currently 5%. If the grandparents want to set aside enough today to cover all twelve years of tuition expenses, howmuch should they set aside? Show steps using a BAIIPlus Calculator

In BA calculators use PV function and calculate required money.

Two wealthy grandparents want to set aside a large sum of money today in order to pay for their granddaught private school tuition. Their granddaughter will start school five years from now, and the grandparents will hav twelve years of tuition (1" grade through 12th grade). Tuition is expected to cost $17,500 per year, and inte are currently 5%. If the grandparents want to set aside enough today to cover all twelve years of tuition expe much should they set aside? Show steps using a BAIIPlus Calculator

Two wealthy grandparents want to set aside a large sum of money today in order to pay for their granddaught private school tuition. Their granddaughter will start school five years from now, and the grandparents will hav twelve years of tuition (1" grade through 12th grade). Tuition is expected to cost $17,500 per year, and inte are currently 5%. If the grandparents want to set aside enough today to cover all twelve years of tuition expe much should they set aside? Show steps using a BAIIPlus Calculator

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

Atita plans to gift $150,000 to her daughters as a gift in the future. She thinks it will help her daughter fulfil her dreams when she reaches her age to marry. Assume her daughter is 3 years old and may get married in her 20s. Assume that Atita has $30,000 and wishes to invest that in a financial asset with a 9% rate of return per annum. Required: How would you define the amount of $30 000 and $150 000 in terms of the time value of money? ANSWER a (i): (answer box will enlarge as you enter your response) How long will she have to wait until she reaches the goal of $150 000? ANSWER a (ii): Mark will receive $13,500 from his parent at the end of each year for five years. He plans to invest them in a financial asset with an interest rate of 7.5%. How much money…
Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 10% annual interest rate, compounded quarterly, in order to have $50,000 in the fund at the end of 15 years? They should deposit $
A wealthy man desires to award annual scholarships to deserving ECE students for 5 years. The scholarship will start one year after their scholarship fund is established. The fund will award P120,000 for the first year; P150,000 each year for the next two years and P180,000 each year for the remaining years. If the fund earns 15% compounded semiannually, what is the amount needed now to sustain the said scholarship?
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.
Johnny and June would like to begin saving for their children's college education. They have four kids, ages 1, 5, 11, and 14. Each child will begin college at 18 and attend a private university for four years. Tuition is currently $11,000 per year and is increasing at 5% per year. They can earn an after - tax rate of return of 9%. How much must they save at the end of each year if they would like to make the last payment at the beginning of their youngest child's last year of college?
← A newborn child receives a $8,000 gift toward a college education from her grandparents. How much will the $8,000 be worth in 19 years if it is invested at 5.9% compounded quarterly? It will be worth $ (Round to the nearest cent.)
Suppose that your parents are willing to lend you $20,000 for part of the cost of your college education and living expenses. They want you to repay them the $20,000, without any interest, in a lump sum 15 years after you graduate, when they plan to retire and move. Meanwhile, you will be busy repaying federally guaranteed loans for the first 10 years after graduation. But you realize that you won’t be able to repay the lump sum without saving up. So you decide that you will put aside money in an interest-bearing account every month for the five years before the payment is due. You feel comfortable with putting aside $275 a month (the amount of the payment on your college loans, which will be paid off after 10 years). How high an annual nominal interest rate on savings do you need to accumulate the $20,000 in 60 months, if interest is compounded monthly? Enter into a spreadsheet the values d 5 275, r 5 0.05 (annual rate), and n 5 60, and the savings formula with r replaced by r/12 (the…
A friend of mine has a 22-year old daughter. He wants to give her a "$1,000,000 gift" for her college graduation present, with the caveat that she cannot have access to the gift for 45 years. Given that he invests in an asset that will earn 12% APR compounded annually, how much would he need to invest today?
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
Your five-year old daughter has just announced that she would like to attend college. Your best guess is that it will cost approximately $25,000 per year for four years in tuition, books, rent, etc. for her to attend State College 12 years from now (first payment beginning on year 13). You believe that you can earn a rate of 9% on investment to meet this goal. a. If you were to invest a lump sum today in hopes of covering your daughter’s college costs, how much would you have to invest? b. If you now decided to invest annually instead, how much would you have to invest every year? (investment every year, years 1-12) c. You just learned of a $10,000 inheritance and plan to invest it in your daughter’s college fund (inheritance is available today at time 0). Given this new source of funds how much do you have to invest every year? d. Create a combo box that will switch provide the user with 5 different inheritance amounts ($8,000, $9,000, $10,000, $11,000 and $12,000)

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