Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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Chapter 5, Problem 4DTM
Saving for College. You want to create a college fund for a child who is now 3 years old. The fund should grow to $60,000 in 15 years. If an investment available to you will yield 6 percent per year, how much must you invest in a lump sum now to realize the $60,000 when needed? (Hint: Use Appendix A.2 or visit the Garman/ Forgue companion website.)
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You want to create a college fund for a child who is now 3 years old. The fund should grow to $60,000 in 15 years. If an investment available to you will yield 6 percent per year, how much must you invest in a lump sum now to realize the $60,000 when needed?
Use the savings plan formula to answer the following question.
Your goal is to create a college fund for your child. Suppose you find a fund that offers an APR of 7%. How much should you deposit
monthly to accumulate $90,000 in 15 years?
...
You should invest $ each month.
(Do not round until the final answer. Then round to two decimal places as needed.)
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You want to create a college fund for a child who is now 4 years old. The fund should grow to $55,000 in 14 years. If an investment available to you will yield 8 percent per year, how much must you invest in a lump sum now to realize the $55,000 when needed? Round your answer to nearest dollar.
Chapter 5 Solutions
Personal Finance (MindTap Course List)
Ch. 5.1 - Prob. 1CCCh. 5.1 - Explain the circumstances when it would be...Ch. 5.1 - Prob. 3CCCh. 5.1 - Summarize your insurance protections when you have...Ch. 5.2 - Explain why opening a checking account and a money...Ch. 5.2 - Prob. 2CCCh. 5.2 - Prob. 3CCCh. 5.2 - Prob. 4CCCh. 5.3 - Prob. 1CCCh. 5.3 - Prob. 2CC
Ch. 5.4 - Prob. 1CCCh. 5.4 - Prob. 2CCCh. 5.4 - Prob. 3CCCh. 5.4 - Prob. 4CCCh. 5.5 - Prob. 1CCCh. 5.5 - Prob. 2CCCh. 5 - Invest Now or Later? Twins Natalie and Kaitlyn are...Ch. 5 - Prob. 2DTMCh. 5 - Reconciling a Checking Account. Andrew Parker, of...Ch. 5 - Saving for College. You want to create a college...Ch. 5 - Prob. 5DTMCh. 5 - Prob. 1FPCCh. 5 - Prob. 2FPCCh. 5 - Prob. 3FPCCh. 5 - Prob. 4FPCCh. 5 - Prob. 5FPCCh. 5 - Prob. 6FPCCh. 5 - Prob. 7FPCCh. 5 - Prob. 8FPCCh. 5 - Keep Your Accounts Current. Go online every few...
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- 4. Suppose you make an annual contribution of BD100 each year to a college education fund for a niece. She is 4 years old now, and you will start next year and make the last deposit when she is 18. The fund is a money market account earning 6.5%/year. What will it be worth immediately after the last deposit? You may also set up spreadsheet solutionarrow_forward4. Suppose you make an annual contribution of BD300 each year to a college education fund for a niece. She is 4 years old now, and you will start next year and make the last deposit when she is 18. The fund is a money market account earning 6.5%/year. What will it be worth immediately after the last deposit? You may also set up spreadsheet solution AGE Beginning Balance Ending Balance Deposit Interestarrow_forwardSuppose you want to begin a college fund for your newborn child. You hope to accumulate $45,000 by 20 years from now. If a current investment opportunity yields 6%, how much must you invest in a LUMP SUM today to have the $45,000 when needed in 20 years? $14,900 $13,200 $136,200 $14,000 $144,300arrow_forward
- I tried to answer the following exercise. Please let me know if it is correct. If I didn't do it right, please correct me. You would like to have $200,000 in a college fund in 15 years. How much do you need today if you expect to earn 12% while you are investing to pay for your child’s college? Answer: PV=200,000/(1+0.12)^15= 200,000/5.4736=36,539.02 The amount needed today to invest at 12% for 15 years to grows 200,000 is 36,539.02arrow_forwardYou want to create a college fund for a child who is now 3 years old. The fund should grow to $60,000 in 15 years. If an investment available to you will yield 6 percent per year, how much must you invest in a lump sum now to realize the $60,000 when needed? Round to the nearest cent. DO NOT INCLUDE COMMAS OR $.arrow_forwardYour goal is to create a college fund for your child. Suppose you find a fund that offers an APR of 5%. How much should you deposit monthly to accumulate $85,000 in 15 years?arrow_forward
- Present Value. You want to begin a college fund for your new born child; you hope to accumulate $500,000 within 18 years from now. If a current investment opportunity yields 11 % annually, how much must you invest in a lump sum (or one-time payment) in order to reach the $500,000 when needed?arrow_forwardNOTE:-I request to you not use excel to solve.if know correct solution then only attempt ok. Q)suppose your child is 10 years old now and you decided to start an education fund your child next year. You plan to contribute $2,500 to this fund in the 1st year and increase the annual contribution by 5% every year. The last payment will be made when your child goes to university at the age of 18. You expect to earn an 8% nual return on this fund. How much do you expect to be the value of the fund when the child goes to the universityarrow_forwardPlease show financial calculator inputs for this problem.…Your sister would like your help planning for her new daughter’s college education. She has estimated that the cost of 1 year of college (tuition, room, and board) is currently $60,000 a year. The cost of college is estimated to increase at an annual rate of 5%. She would like you to figure out how much she would need to deposit at the end of each month for the next 18 years to cover her daughter’s four years of tuition assuming her deposits will earn 12% each year (1 % a month) (Note your account will earn interest a 1% a month even if you are not making monthly payments after you stop paying in at the end of the 18th year.arrow_forward
- 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 $30,000 in the fund at the end of 10 years? Question content area bottom Part 1 They should deposit $enter your response here. (Round up to the nearest cent.)arrow_forwardYou plan to send your first born child to DePaul for a 4-year degree with 4 annual payments. Your first payment will start in 25 years in the amount of $ 58,982.71 and grow by 9% per year. Assuming a discount rate of 6%. You start saving in one year from now a fixed amount for 20 total deposits. What is the amount of that annual savings deposit in order to save enough to fund the education? Use the $ symbol and round to the nearest thousand dollars. A correct answer would look like $13,000.arrow_forwardHal wants to establish a savings fund from which a community organization could draw $890 a year for 20 years. If the account earns 2.5 percent annual interest, what amount does he have to deposit now to achieve this goal? Use Exhibit 1B-4. (Round time value factors to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Amount to be deposited $arrow_forward
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