! Your parents invest $10,000 in a college fund when you are born.They find a fund that will return 8% per year for 18 years.When you are 18 you find a school that charges $12,000 tuition peryear. Tuition increases at a rate of 11% per year (so the second yearwill have a tuition of $13,320) , will this money take care of four yearsof school? How many years of college will this take care of? Explainyour answer fully.

Initial investment (P) = $10000 Interest rate (r) = 8% Fund duration (n) = 18 years Let the tuition…

Answered: Your parents invest $10,000 in a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 35P

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You 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.
You plan to send your first born child to College for a 4-year degree with 4 annual payments. Your first payment will start in 18 years in the amount of $50,000 and grow by 15% per year. Assuming a discount rate of 6%, how much do you need to set aside today to fund your child's education? Use the $ symbol and round to the nearest thousand dollars. A correct answer would look like $34,000.
Your 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?
Your parents say they will loan you $15,000 today for college. They would like to be repaid $21,000 at the end of 10 years. What is the annual yield they will receive?
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?
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.
Suppose that you are saving for college for a child. That child was just born and you will have to make 4 equal tuition payments over a four year period with the first occurring in exactly 18 years. Each successive tuition payment is made exactly a year after the prior payment. You also plan on buying this child a car in exactly 15 years using this same savings. You will pay $30,000 at that time for the car. You will be depositing money every year with the first check deposited into savings today and the last one the day the first tuition check is due. If you want to be able to pay $65,000 each year for tuition, how much do you have to save per year? Assume the discount rate is 10 percent per year.
You are saving for the college education of your two children. They are two years apart in age; one will begin college 18 years from today, and another child will begin 20 years from today. You estimate the college expenses to be $40000 per year per child. Given r = 20% p.a. compounded monthly is the hurdle rate for calculations. College expenses are paid at the beginning of each school year. How much money must you deposit in an account each year (in what range will the answer be in $) to fund your children's education? Your deposits begin one year from today. You will make the last deposit at the end of the 16th year. Assume five years of college.
You receive a $7,000 check from your grandparents for graduation. You decide to save it toward a down payment on a house. You invest it earning 12% per year and you think you will need to have $14,000 saved for the down payment. How long will it be before the $7,000 has grown to $14,000 ? To double the money you received from your grandparents, it will take years. (Round to one decimal place.)
You are saving for the graduation (4 years) of your two children. They are two years apartin age; one will begin university in 15 years from today, the other will begin in 17 yearsfrom today. You estimate your children’s university expenses to be $21,000 per year perchild. The annual interest rate is 15 percent. How much money must you deposit in anaccount each year to fund your children’s education? You will begin payments one yearfrom today. You will make your last deposit when your oldest child enters university.
You need P50,000 per year for four years to go to college. Your father invested P16300 per year in a 10.163% account for your education starting from the year you were born until you were 18. If you withdraw the P50,000 at the end of your 19th, 20th, 21st, and 22nd years to aid you in your college years, how much money will be left in the account at the end of your last withdrawal?
If you put $10,000 into an investment to fund your child's college education in 18 years, how much would you accumulate if you earned 10.24% per year?

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