Financial Accounting Question please answer Kristen is planning for her son's college education tobegin 5 years from today. She estimates the yearlytuition, books, and living expenses to be $5,000 per yearfor a four-year degree. How much must Kristin deposittoday, at an interest rate of 8%, for her son to be ableto withdraw $5,000 per year for four years of college?Assume the first payment occurs at the beginning ofYear 5 (i.e. she will make the first payment on the firstday of college).a) 13,153b) 13,623c) 12,173d) 12,693e) None of the above.

Present Value (PV) of withdrawals at Year 5Kristen's son will withdraw $5,000 at the beginning of…

Answered: Kristen is planning for her son's…

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

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Michiko and Saul are planning to attend the same university next year. The university estimates tuition, books, fees, and living costs to be 12,000 per year. Michikos father has agreed to give her the 12,000 she needs to attend the university. Saul has obtained a job at the university that will pay him 14,000 per year. After discussing their respective arrangements, Michiko figures that Saul will be better off than she will. What, if anything, is wrong with Michikos thinking?
Kristen is planning for her son's college education to begin 5 years from today. She estimates the yearly tuition, books, and living expenses to be $5,000 per year for a four-year degree. How much must Kristin deposit today, at an interest rate of 8%, for her son to be able to withdraw $5,000 per year for four years of college? Assume the first payment occurs at the beginning of Year 5 (i.e. she will make the first payment on the first day of college). a) 13,153 b) 13,623 c) 12,173 d) 12,693 e) None of the above.
Ginny is planning for her son's college education to begin five years from today. She estimates the yearly tuition,books, and living expenses to be $5,000 per year for a four-year degree. How much must Ginny deposit today, at aninterest rate of 8 percent, for her son to be able to withdraw $5,000 per year for four years of college? Assume the firstbeginning of Year 5. In other words, she will pay the first payment on the first day of school.a. $20,000b. $13,620c. $12,273d. $12,173
Laura is saving for the college education of hertwochildren. They are two years apart in age; one will begin college in 7years, another at year 9. She estimates her children’s college expenses to be $30,000 per year per child, paid at the beginningof each college year (first payment for first child is at year 7and so on). The annual interest rate is 6percent. How much money must Laura deposit in an account each year to fund her children’s education? She will begin payments one year from today. She will make your last deposit when her oldest child enters college. Also assume that each child will take 4 years to graduate from college. (Note: This question is worth more)
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Sam's grandparents have offered to help pay for some of her university expenses. Sam will receive $5,000 each for year of study, with the payments received at the start of each school year. How much will her grandparents have to invest today to make four annual (start-of-year) payments? Assume that Sam will be starting school in 4 years from today and that a rate of interest of 6% per year with annual compounding applies both before and during Sam's time at university.
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?
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