A man wants to help provide a college education for his young daughter. He can afford to invest $1500/yr for the next 5 years, beginning on the girl's 5th birthday. He wishes to give his daughter $10,000 on her 18th, 19th, 20th, and 21st birthdays, for a total of $40,000. Assuming 6% interest, what uniform annual investment will he have to make on the girl's 9th through 17th birthdays?

A man wants to help provide a college education for his young daughter. He can afford to invest $1500/yr for the next 5 years, beginning on the girl's 5th birthday. He wishes to give his daughter $10,000 on her 18th, 19th, 20th, and 21st birthdays, for a total of $40,000. Assuming 6% interest, what uniform annual investment will he have to make on the girl's 9th through 17th birthdays?

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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Johnny and June would like to begin saving for their children's college education. They have four kids, ages 1, 5, 11, and 14. Each child will begin college at 18 and attend a private university for four years. Tuition is currently $11,000 per year and is increasing at 5% per year. They can earn an after - tax rate of return of 9%. How much must they save at the end of each year if they would like to make the last payment at the beginning of their youngest child's last year of college?
A couple plans to save for their child's college education. What principal must be deposited by the parents when their child is born in order to have $42,000 when the child reaches the age of 18? Assume the money earns 5% interest, compounded monthly. (Round your answer to two decimal places.)
A couple plans to save for their child’s college education. What principal must be deposited by the parents when their child is born in order to have$80,000 when the child reaches the age of 18? Assume the money earns 8% interest, compounded quarterly.
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
The parents of a newborn baby would like to put money away today to cover 100% of the child's expected total 4 - years of college tuition. The first tuition payment is due exactly 18 years from today, and the next three payments are due at the end of years 19, 20 and 21. Suppose that the parents estimate that the cost of tuition will be $86,000 per year for the first three years, but that the fourth year's tuition will be $96,000. Which comes closest to the amount of money that needs to be set aside today if the interest rate is 6% ? A. $ 104, 719 B. $ 136, 639 C. $ 16,857 D. $ 113, 608 E. $ 198, 781
An electrical engineer who is anticipating paying for his daughter’s college education plans to start depositing money now (year 0) and continue through year 17. If he deposits $5000 each year, how much will his daughter be able to withdraw each year starting in year 18 and continuing through year 22? Assume the account earns interest at 8% per year.
Holly wants to have $220,000 to send a recently born child to college. She sets up a 529 plan and wants to know how much she must invest at the end of each year for the next 15 years if the funds can earn 4 percent. Use Appendix C to answer the question. Round your answer to the nearest dollar.$ If she can earn 5 percent, how much less will she have to invest each year? Use Appendix C to answer the question. Round your answer to the nearest dollar.$
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)
If David Jones wants to save for his child's college tuition in 20 years, how much money should he build into his tuition account at the end of each year in order to be able to withdraw 110,000/year for 4 years. Assuming a 4% interest rate before the child goes to college and a 5% interest rate after the child goes to college, calculate yearly contribution to David Jones.
A couple will retire in 40 years; they paln to spend about $23,000 a retirement, which should last about 20 years. They believe that they can earn 9% interest on retirement savings. a. If they make annual payments into a savings plan, how much will they need to save each year? b. How would the answer to part (a) change if the couple realizes that in 15 years they will need to spend $63,000 on their childs college education?

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