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1) If ABC's annual tuition increases by 8% per year, approximately how much will the annual tuition be for Matthew during his freshman year? $ 2) If ABC's room & board costs increase by 5% per year, what will be the approximate total costs of tuition plus room & board be for Matthew's senior year at ABC? $

1) If ABC's annual tuition increases by 8% per year, approximately how much will the annual tuition be for Matthew during his freshman year? $ 2) If ABC's room & board costs increase by 5% per year, what will be the approximate total costs of tuition plus room & board be for Matthew's senior year at ABC? $

Essentials Of Investments
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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STDIEN IELNOO 1001 Beth & Ed Carlton want to begin some serious financial planning to fund the future education costs of their 3-year old son, Matthew. They assume that Matthew will attend Ed's alma mater, AB College (ABC), beginning 15 years from today. Current tuition at ABC is $11,500 per year. Current room & board costs at ABC are about $6,000 per year. The only investment Beth & Ed have made to pay for Matthew's college costs are 10 zero-coupon bonds that they purchased when Matthew was born. The face amount of each bond is $1000. The bonds were originally purchased for $490 each with an original maturity of 18 years. They are now scheduled to mature 15 years from today. The Carlton's have asked you to help them plan for the costs of Matthew's future college education, In your conversations with Beth & Ed, they told you they want to accumulate all the needed funding by the time Matthew enters college so that they can begin to save extra for their retirement while Matthew is in college. They also told you that Ed's father (Jim Carlton) wants to help pay for Matthew's college education.
Transcribed Image Text:STDIEN IELNOO 1001 Beth & Ed Carlton want to begin some serious financial planning to fund the future education costs of their 3-year old son, Matthew. They assume that Matthew will attend Ed's alma mater, AB College (ABC), beginning 15 years from today. Current tuition at ABC is $11,500 per year. Current room & board costs at ABC are about $6,000 per year. The only investment Beth & Ed have made to pay for Matthew's college costs are 10 zero-coupon bonds that they purchased when Matthew was born. The face amount of each bond is $1000. The bonds were originally purchased for $490 each with an original maturity of 18 years. They are now scheduled to mature 15 years from today. The Carlton's have asked you to help them plan for the costs of Matthew's future college education, In your conversations with Beth & Ed, they told you they want to accumulate all the needed funding by the time Matthew enters college so that they can begin to save extra for their retirement while Matthew is in college. They also told you that Ed's father (Jim Carlton) wants to help pay for Matthew's college education.
1) If ABC's annual tuition increases by 8% per year, approximately how much will the annual tuition be for Matthew during his freshman year? $_ 2) If ABC's room & board costs increase by 5% per year, what will be the approximate total costs of tuition plus room & board be for Matthew's senior year at ABC? $
Transcribed Image Text:1) If ABC's annual tuition increases by 8% per year, approximately how much will the annual tuition be for Matthew during his freshman year? $_ 2) If ABC's room & board costs increase by 5% per year, what will be the approximate total costs of tuition plus room & board be for Matthew's senior year at ABC? $
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