A father has decided to set aside a one time lump sum for college that will amount to $60,000 by the time his 5 year old is 18; years old (13 years). Using 8 percent as the rate and assuming no further investments will be made, how much must the father invest today in order to have $60,000 in 13 years?

A father has decided to set aside a one time lump sum for college that will amount to $60,000 by the time his 5 year old is 18; years old (13 years). Using 8 percent as the rate and assuming no further investments will be made, how much must the father invest today in order to have $60,000 in 13 years?

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 6E

See similar textbooks

Similar questions

A father wants to set aside money for his 5-year-old son's future college education. Money can be deposited in a bank account that pays 8% per year, compounded annually. What equal deposits should be made by the father, on his son's 6th through 17th birthdays, in order to provide $5000 on the son's 18th, 19th, 20th, and 21st birthdays?
A father wants to help provide a college education for his young son. He can afford to invest $600/yr. for the next 4 years, beginning on the boy’s fourth birthday. He wishes to give him $4000 on her 18th, 19th, 20th, and 21st birthdays, for a total of $16,000. Assuming 5% interest, what uniform annual investment will he have to make on the son’s 8th through 17th birthdays?
Mr. and Mrs. Revilla decided to sell their house and to deposit the fund in a bank. After computing the interest, they found out that they may withdraw 350,000 yearly for 9 years starting at the end of 6 years when their child will be in college. How much is the fund deposited if the interest rate is 5% converted annually?
Mr. and Mrs. Revilla decided to sell their house and to deposit the fund in a bank. After computing the interest, they found out that they may withdraw 350,000 yearly for 10 years starting at the end of 3 years when their child will be in college. How much is the fund deposited if the interest rate is 3% converted annually? Round off your answer in two decimal places.
A young student 22 years old has just graduated from college. She accepts a good job and desires to establish her own retirement fund. At the end of each year thereafter she plans to deposit P2,000 in a fund at 15% annual interest. How old will she be when the fund has an accumulated value of P1,000,000?
Mr. and Mrs. Revilla decided to sell their house and to deposit the fund in a bank. After computing the interest, they found out that they may withdraw 350,000 yearly for 13 years starting at the end of 5 years when their child will be in college. How much is the fund deposited if the interest rate is 5% converted annually? Round off your answer in two decimal places.
Despite his relative youth, Samuel Hunter has started planning for his retirement. At present, he has $3,000 he can invest, and he believes that he will be able to invest that amount each year for the next 39 years—40 contributions in total. Round answers to the nearest whole number. a. If his investment earns 4% per year for the 40 years, how much will Samuel have accumulated at the end of 40 years? b. If Samuel delays investing for 10 years, how will that affect the balance accumulated at the end of 40 years? c. If Samuel begins investing now and finds an investment earning 5% per year for 40 years, how much more will he have accumulated than if he earns 4%?
A friend of mine has a 22-year old daughter. He wants to give her a "$1,000,000 gift" for her college graduation present, with the caveat that she cannot have access to the gift for 45 years. Given that he invests in an asset that will earn 12% APR compounded annually, how much would he need to invest today?
8. Hersch's parents set up a fund to help him pay for college. They want him to receive $3000 each month for 5 years, beginning 18 years from now. They plan to invest the money today in an account that pays 4.2% per year compounded monthly. a) How much money must be in the account 18 years from now? b) How much must Hersch's parents invest today? c) How much interest will the fund earn?
Jay Johnson graduated from Another University 10 years ago and has not yet started to investfor his retirement. He plans to work for 30 years and can invest $10,000 at the end of each yearat 7% in his 401(k) plan at work. Once he retires, he will change his asset allocation and earn6% on his investments. If he plans to take out money at the beginning of each year for the next25 years of his retirement, how much can he withdraw each year?
Brenda Young desires to have $16,500 eight years from now for her daughter’s college fund. If she will earn 12 percent (compounded annually) on her money, what amount should she deposit now?
It is Jerry's 14th birthday and his parents plan to invest some money so that they will have $17 000 on Jerry's 18th birthday for his post-secondary education. They invest in an RESP that pays 8.6% per year, compounded quarterly. How much money must Jerry's parents invest now to reach their goal?