None 3. Shondra wishes to accumulate a college fund for her daughter by making 17 equal annual deposits be-ginning on the daughter's first birthday. The fund will be used to make four annual tuition paymentsbeginning on the daughter's 18th birthday. The first tuition payment will be $15,000, with the subsequentpayments increasing by 8% each year. Shondra earns interest on her investment at a 5% annual effectiverate.Determine the minimum amount of her annual deposit.A. Less than $2,200B. At least $2,200, but less than $2,400C. At least $2,400, but less than $2,600D. At least $2,600, but less than $2,800E. At least $2,800

Solving for the minimum annual depositWe can solve this problem by considering the future value of…

Answered: 3. Shondra wishes to accumulate a…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 8E

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3. Shondra wishes to accumulate a college fund for her daughter by making 17 equal annual deposits be- ginning on the daughter's first birthday. The fund will be used to make four annual tuition payments beginning on the daughter's 18th birthday. The first tuition payment will be $15,000, with the subsequent payments increasing by 8% each year. Shondra earns interest on her investment at a 5% annual effective rate. Determine the minimum amount of her annual deposit. A. Less than $2,200 B. At least $2,200, but less than $2,400 C. At least $2,400, but less than $2,600 D. At least $2,600, but less than $2,800 E. At least $2,800
Mr. J. J. Parker is creating a college fund for his daughter. He plans to make 15 yearly payments of $1500 each with the first payment deposited today on his daughter’s first birthday. Assuming his daughter will need four equal withdrawals from this account to pay for her education beginning when she is 18 (i.e. 18, 19, 20, 21), how much will she have on a yearly basis for her college career? J. J. expects to earn a hefty 12% annual return on his investment. (show work)
A couple with a newborn son wants to save for their child's college expenses in advance. The couple can establish a college fund that pays 8% annual interest. Assuming that the child enters college at age 18, the parents estimate that an amount of $50,000 per year will be required to support the child's college expenses for four years. Determine the equal annual amounts that the couple must save until they send their child to college. (Assume that the first deposit will be made on the child's first birthday and the last deposit on the child's 18th birthday. The first withdraw will be made at the beginning of the freshman year, which also is the child's 18th birthday.) O $4,775.80 O $6,016.13 O $6,138.52 O $4,609.37
Zachary wants to set up a fund for her son's education such that she could withdraw $1,764.00 at the beginning of every 3 months for the next 3 years. If the fund can earn 4.60% compounded semi-annually, what amount could she deposit today to provide the payment?
A couple wishes to establish a college fund at a bank for their five-year-old child. The college fund will earn an 8% interest compounded quarterly. Assuming that the child enters college at age 18, the couple estimates that an amount of $30,000 per year. in terms of today's dollars (dollars at child's age of five), will be required to support the child's college expenses for four years. College expenses are estimated to increase at an annual rate of 6%. Determine the equal quarterly deposits the couple must make until they send their child to college. Assume that the first deposit will be made at the end of the first quarter and that deposits will continue until the child reaches age 17. The child will enter college at age 18, and the annual college expense will be paid at the beginning of each college year. In other words, the first withdrawal will be made when the child is 18.
Palma wants to establish a fund for her granddaughter's college education. What lump sum must she deposit in an account that pays an annual interest rate of 6%, compounded monthly, if she wants to have $10,000 in 10 years?
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?
Abigail wishes to establish a trust fund from which her daughter can withdraw $6,000 every six months for 15 years, when she reaches 16 years old. At the end of which time, she will receive the remaining money in the trust, which she would like to be $25,000. The trust will be invested at 6% per annum compounded semi-annually. How large should the trust be?
Kori and Ben plan to send their son to university. To pay for this they will contribute 9 equal yearly payments to an account bearing interest at the APR of 2.1%, compounded annually. Six years after their last contribution, they will begin the first of five, yearly, withdrawals of $33,600 to pay the university's bills. How large must their yearly contributions be?
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Please answer the following questions recording your answer beside the letter identifying the question. Answers: A. В. C. D. Questions: Mr. and Mrs. Smith plan to have their daughter's college education fully funded at the end of 18 years from today. They plan to invest annually at the end of each year to reach the desired dollar amount. The Smith's estimate that they will earn 6% on all invested monies during the 18 years. The cost of college today is $30,000 annually and is expected to increase by 3% annually over each of the next 18 years. Part A- What is the expected cost of one year of college 18 years from today? Write this value beside letter A above. Part B - Begin by multiplying your answer in Part A by 4 to approximate the cost of four years of college. How much will the Smith's need to invest at the end of each year for the next 18 years to reach what you approximate the cost of four years of college to be? Write this value beside letter B above. Part C- The Smiths will each…
A client's child will be attending college in 7 years. Assume current tuition and fees are $37, 294, and inflation for college costs averages 1.96 percent. She can earn 9.94 percent on the money she invests for this purpose. The client wants to know how much she will need to set aside today to pay the first year's tuition and fees.

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