A professor has two daughters that he hopes will one day go to college. Currently, in-state students at the localUniversity pay about $21,208.00 per year (all expenses included). Tuition will increase by 3.00% per year going forward.#11 OunansweredThe professor's oldest daughter, Sam, will start college in 16 years, while his youngest daughter, Ellie, will begin in 18not_submittedyears. The professor is saving for their college by putting money in a mutual fund that pays about 9.00% per year.Tuition payments are at the beginning of the year and college will take 4 years for each girl. (Sam's first tuition paymentwill be in exactly 16 years)Attempts Remaining: InfinityThe professor has no illusion that the state lottery funded scholarship will still be around for his girls, so how much doeshe need to deposit each year in this mutual fund to successfully put each daughter through college. (ASSUME that themoney stays invested during college and the professor will make his last deposit in the account when Sam, theOLDEST daughter, starts college.)SubmitAnswer format: Currency: Round to: 2 decimal places.

As per the given information, the professor is saving for tuition fees of their daughters in a…

Answered: #11 A professor has two daughters that…

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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Your daughter needs to be able to draw $50,000 a year from her college savings fund (you started from birth) to pay for college expenses to obtain a medical degree (assume she spends 4 years for bachelor, 4 years for med school, then additional 2 years as resident and yearly spending will be consistent from year to year). At start of her college career, she intends to invest her savings in government securities that should return 5.5% a year compuounded continuously. a. Obtain the equation for dP/dt and then find the genearl solution of P(t) with, as yet undetermined, initial value P_0. b. How large must your daughter's initial college savings be so that she can continue drawing her $50,000 income until she becomes a doctor?
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