46. Your younger sister, Brittany, will start college in five years. She has justinformed your parents that she wants to go to Eastern State U., which will cost$30,000 per year for four years (costs assumed to come at the end of each year).Anticipating Brittany's ambitions, your parents started investing $5,000 peryear five years ago and will continue to do so for five more years.How much more will your parents have to invest each year for the nextfive years to have the necessary funds for Brittany's education? Use 10 percentas the appropriate interest rate throughout this problem (for discounting orcompounding). Round all values to whole numbers.Annuityconsideration(LO4)47. Brittany (from Problem 46) is now 18 years old (five years have passed),and she wants to get married instead of going to college. Your parents haveaccumulated the necessary funds for her education.Instead of funding her schooling, your parents are paying $10,000 for hercurrent wedding and plan to take year-end vacations costing $3,000 per year forthe next three years.Specialconsiderations ofannuities and timeperiods(LO4)How much money will your parents have at the end of three years to helpyou with graduate school, which you will start then? You plan to work on amaster's and perhaps a PhD. If graduate school costs $32,600 per year,approximately how long will you be able to stay in school based on thesefunds? Use 10 percent as the appropriate interest rate throughout this problem.Round all values to whole numbers.www.mhhe.com/bhd14e

Since you have asked multiple questions, we will solve the first question for you. If you want any…

46. Your younger sister, Brittany, will start college in five years. She has just informed your parents that she wants to go to Eastern State U., which will cost $30,000 per year for four years (costs assumed to come at the end of each year). Anticipating Brittany's ambitions, your parents started investing $5,000 per year five years ago and will continue to do so for five more years. How much more will your parents have to invest each year for the next five years to have the necessary funds for Brittany's education? Use 10 percent as the appropriate interest rate throughout this problem (for discounting or compounding). Round all values to whole numbers.

46. Your younger sister, Brittany, will start college in five years. She has just informed your parents that she wants to go to Eastern State U., which will cost $30,000 per year for four years (costs assumed to come at the end of each year). Anticipating Brittany's ambitions, your parents started investing $5,000 per year five years ago and will continue to do so for five more years. How much more will your parents have to invest each year for the next five years to have the necessary funds for Brittany's education? Use 10 percent as the appropriate interest rate throughout this problem (for discounting or compounding). Round all values to whole numbers.

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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Suppose that your parents are willing to lend you $20,000 for part of the cost of your college education and living expenses. They want you to repay them the $20,000, without any interest, in a lump sum 15 years after you graduate, when they plan to retire and move. Meanwhile, you will be busy repaying federally guaranteed loans for the first 10 years after graduation. But you realize that you won’t be able to repay the lump sum without saving up. So you decide that you will put aside money in an interest-bearing account every month for the five years before the payment is due. You feel comfortable with putting aside $275 a month (the amount of the payment on your college loans, which will be paid off after 10 years). How high an annual nominal interest rate on savings do you need to accumulate the $20,000 in 60 months, if interest is compounded monthly? Enter into a spreadsheet the values d 5 275, r 5 0.05 (annual rate), and n 5 60, and the savings formula with r replaced by r/12 (the…
A father is now planning a savings program to put his daughter through college. She is 13, plans to enroll at the university in 5 years, and she should graduate 4 years later. Currently, the annual cost (for everything - food, clothing, tuition, books, transportation, and so forth) is $15,000, but these costs are expected to increase by 6% annually. The college requires total payment at the start of the year. She now has $9,000 in a college savings account that pays 8% annually. Her father will make six equal annual deposits into her account; the first deposit today and sixth on the day she starts college. How large must each of the six payments be? (Hint: Calculate the cost (inflated at 6%) for each year of college and find the total present value of those costs, discounted at 8%, as of the day she enters college. Then find the compounded value of her initial $9,000 on that same day. The difference between the PV of costs and the amount that would be in the savings account must be…
The Jeffersons have asked you what would be needed to fund the children’s future college costs. Assume each child will begin college at age 18 and graduate in four years. Assume current costs are $24,000 per year and are expected to increase by 5% per year and investments earn 7%. A. Assuming no existing assets are dedicated to college, what is the annual savings amount required to fund the children’s education? The Jeffersons’ goal is to have an amount at the beginning of the freshman year for each child that is sufficient to fund a serial payment covering the $24,000 of current costs of college adjusted for inflation for each of the four years of college. Please include your calculator keystroke inputs [PV, I/YR, N, FV, and PMT (if needed)] for each step of this calculation. Also include whether any PMTs are in the end mode or the begin mode. B. What would you say to the Jeffersons about their education funding situation? Write a script of a single paragraph as if you…
Ethan is creating a college investment fund for his daughter. He will put in $21,000 per year for the next 17 years and expects to earn a 12% annual rate of return. How much money will his daughter have when she starts college? Use Appendix C to calculate the answer. Multiple Choice $1,014, 538 $1,015,551 $1,027,291 $1,026,564
Jan wants to plan for her daughter's education. Her daughter, Rachel was born today and will go to college at age 18 for five years. Tuition is currently $15,000 per year, in today's dollars. Jan anticipates tuition inflation of 6% and believes she can earn an 11% return on her investment. How much must Jan save at the end of each year, if she wants to make her last payment at the beginning of her daughter's first year of college? $4,680.37 $7,334.72 $3,882.03 $2,547.54
Angela wishes to buy a boat in five years that presently costs $150,000. She expects the cost of the boat to increase due to inflation by 3% per year for the next two years and 4% per year the following three years. She also wants to spend $50,000 per year for 6 years beginning at the end of 10 years from today. How much must she save each year for the next 5 years if she can earn 6% on her investments? a. $66,302.67 b. $64,347.13 c. $65,946.95 d. $61,349.81 e. None of these are correct
Your five-year old daughter has just announced that she would like to attend college. Your best guess is that it will cost approximately $25,000 per year for four years in tuition, books, rent, etc. for her to attend State College 12 years from now (first payment beginning on year 13). You believe that you can earn a rate of 9% on investment to meet this goal. a. If you were to invest a lump sum today in hopes of covering your daughter’s college costs, how much would you have to invest? b. If you now decided to invest annually instead, how much would you have to invest every year? (investment every year, years 1-12) c. You just learned of a $10,000 inheritance and plan to invest it in your daughter’s college fund (inheritance is available today at time 0). Given this new source of funds how much do you have to invest every year? d. Create a combo box that will switch provide the user with 5 different inheritance amounts ($8,000, $9,000, $10,000, $11,000 and $12,000)

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