3. Your client has a 2-year old child whose college education they plan to fund when the child turns 18in EXACTLY 16 yearsThey plan to accumulate a lump sum by the first day of school to pay their child $2,000 a monthBEGINNING the first day of school for the next 4 years (48 monthly payments).How much must your client invest EACH MONTH starting TODAY at the BEGINNING of eachmonth in the mutual fund portfolio you recommend with a 7% expected return?STEP 1: Calculate the lump sum your child will need at the start of the their FIRST semester that willprovide them with a $25,000 payment at the beginning of each semester.PVI/YРМТFV

First calculate the lump sum amount needed at the start of college. This lump sum can be calculated…

Answered: 3. Your client has a 2-year old child…

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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Similar questions

4) Ashley deposits $500 into an investment fund each January 1 starting in 2005 and continuing to 2014 inclusive. If the fund has an average annual growth rate of ji = 10%, how much will be in her account on January 1, 2019?
You deposit the following at the end of each year into a growth mutual fund that earns 11 percent per year: How much should the fund be worth at the end of 5 years How much interest have you earned in total?
You are going to invest in a stock mutual fund with a front-end load of 6 percent and an expense ratio of 1.39 percent. You also can invest in a money market mutual fund with a return of 2.6 percent and an expense ratio of 0.10 percent. If you plan to keep your investment for 2 years, what annual return must the stock mutual fund earn to exceed an investment in the money market fund? What if your investment horizon is 9 years? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. 2 Years 9 Years Annual Return % %
You deposit the following, at the end of each year, into a growth mutual fund that earns 8% per year. Calculate the future total value of the fund at the end of 5 years. Enter Your answer rounded to decimal places, no dollar sign, ex. 5100.54 Year Deposit 1 8,000 2 6,000 3 4,500 4 9,500 5 6,000
you that will pay you $100,000 when you turn 25. If the relevant discount rate is 11 percent, how much is this fund worth today? (See Problem 3.) Calculating Rates of Return You've been offered an investment that will double your money in 12 years. What rate of return are you being offered? Check your answer using the Rule of 72. (See Problem 4.) 4.3 Calculatin
Suppose you inherit $100,000 at age 25 and immediately invested in a growth fund who’s annual rate of return average is 13%. Five years later, you transfer all proceeds from the scrubs fun into a long-term IRA that pays an average annual rate of 8%. Immediately you start making additional contributions of $7000 per year to the same IRA. Assuming continuous interest, steady interest rates, and a perfect record of making annualcontributions, how much is this IRA worth when you reach the age of 65? The formula that will need to be used is A = P e^r*t + D/r (e^r*t - 1). Hint: Use the continuous interest formula to find me a cumulated amount for the first five years, which is then the initial investment, P, into the IRA
You are 22 years old and you want to have $1 million in your retirement account at age 50. How much money do you need to invest each year (to the nearest $100), if you can get an 8% annual rate of return on mutual funds that invest in S&P 500 stocks? OA $35,700 OB.$10,500 OC. $15,600 O D. $20,600 Reset Selection

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