Please round the answer up to TWO decimal places. Pam and Jim are saving money for their two children who they plan to send to university.The eldest child will enter university in 5 years while the younger will enter in 7. Each child isexpected spend four years at university. University fees are currently R20 000 per year and areexpected to grow at 5% per year. These fees are paid at the beginning of each year.Pam and Jim currently have R40 000 in their savings and their plan is to save a fixed amounteach year for the next 5 years. The first deposit taking place at the end of the current year andthe last deposit at the date the first university fees are paid.Pam and Jim expect to earn 10% per year on their investments.What amount should they invest each year to meet the cost of their children's university fees? R

The answer is in the explanation.Explanation:1. Calculate the future cost of the university fees for…

Answered: Pam and Jim are saving money for their…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 6E

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Michael and Ava want to know how much it will cost to put their daughter Lily through college. She will begin college in 13 years. Assume college costs $12,000 per year today. Lily will attend college for 4 years. College costs increase 4.0% each year. How much money do Michael and Ava need to have on hand on the day Lily BEGINS college, in order to fund her entire college degree? (Assume the money will earn 6% annual interest while it is in her college savings account). Lily will spend the entire amount available during her college years. Each year of college she will withdraw more than the prior year (the amount will increase by the college cost inflation rate). (amortize the balance in her account to zero at the end of the 4 college years...base calculations on a growing annuity withdrawal schedule). (amortize the balance in her account to zero at the end of the 4 college years). O $73,292.32 O $69,235.87 O $48,000.00 O $79,923.53
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