Michael and Ava want to know how much it will cost to put their daughter Lily through college. She will begin ollege in 13 years. Assume college costs $12,000 per year today. Lily will attend college for 4 years. College osts increase 4.0% each year. How much money do Michael and Ava need to have on hand on the day Lily BEGINS college, in order to fund her entire college degree? (Assume the money will earn 6% annual interest while is in her college savings account). Lily will spend the entire amount available during her college years. Each year of college she will withdraw more than the prior year (the amount will increase by the college cost inflation rate). amortize the balance in her account to zero at the end of the 4 college years...base calculations on a growing nnuity withdrawal schedule). (amortize the balance in her account to zero at the end of the 4 college years). $73,292.32 O $69,235.87

Michael and Ava want to know how much it will cost to put their daughter Lily through college. She will begin ollege in 13 years. Assume college costs $12,000 per year today. Lily will attend college for 4 years. College osts increase 4.0% each year. How much money do Michael and Ava need to have on hand on the day Lily BEGINS college, in order to fund her entire college degree? (Assume the money will earn 6% annual interest while is in her college savings account). Lily will spend the entire amount available during her college years. Each year of college she will withdraw more than the prior year (the amount will increase by the college cost inflation rate). amortize the balance in her account to zero at the end of the 4 college years...base calculations on a growing nnuity withdrawal schedule). (amortize the balance in her account to zero at the end of the 4 college years). $73,292.32 O $69,235.87

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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Amy currently has $500 in an account with an annual rate of return of 4.3%. She wants to have $3000 for a trip to Florida when she graduates in 2 years. How much will she have to save each month to afford her trip?
Richard just entered a university, and his parents are planning to give him a car upon graduation. How much should they invest into an account with an APR of 10% compounded monthly if they estimate that in four years the car will cost $15,000? Round your answer to the nearest cent.
Jelani and Angel are saving for their daughter Candice's college education. Candice just turned 10 (at t = 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $14.500 a year, but they are expected to increase at a rate of 4.0% a year. Candice should graduate in 4 years--if she takes longer or wants to go to graduate chool, she will be on her own. Tuition and other costs will be due at the beginning of each school year (at t= 8, 9, 10, and 11). 30 far, Jelani and Angel have accumulated $8,000 in their college savings account (at t = 0). Their long-run financial plan is to add an additional $4,500 in each of the next 4 years (at t = 1, 2, 3 ind 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 10%. How large must the annual payments at t = 5, 6, and 7 be to cover Candice's anticipated college costs? O a. $6.973.29 O b.…
What is the process of consideration of the payback period?
Gabe and Sarah would like to begin saving for their children's college education. They would like to know the amount of college funds that would be necessary on day one of college to pay for all tuition costs for each child. The current tuition at the university is $25,000. The couple is comfortable assuming an annual rate of return of 6% on their college investment savings program. They anticipate that each child will begin college at age 18 and attend for four years. The Consumer Price Index (CPI) is expected to be 3% and the expected college inflation rate is 5% per year.
6) Susan is looking to purchase her first home five years from today. The house costs $1,550,000. She will have to make a down payment of 10% of this amount and plans to take a loan from the bank for the difference. Bank charges are approximately 15% of the loan amount. She plans to start saving from today to cover both the down payment and the bank charges. a. How much will she need to save to cover both the down payment and bank charges? b. If she currently has $195,000 in her account and will make no further deposits over the next five years, what rate of interest must she earn on this account in order to achieve the savings target calculated in part (a) above?
Mike and Terri estimate that they want to buy a house for $186,000.00, and they need to make a down payment of 17.5% of the cost of their house. If they have 18 months to save for the down payment, how much do they need to invest into an account earning 4.518% compounded monthly so that they can reach their goal? Mike and Terri need to invest (Note: Your answer should have a dollar sign and be accurate to two decimal places) Preview My Answers Submit Answers You have attempted this problem 0 times. You have 6 attempts remaining. Email Instructor
Your daughter needs to be able to draw $50,000 a year from her college savings fund (you started from birth) to pay for college expenses to obtain a medical degree (assume she spends 4 years for bachelor, 4 years for med school, then additional 2 years as resident and yearly spending will be consistent from year to year). At start of her college career, she intends to invest her savings in government securities that should return 5.5% a year compuounded continuously. a. Obtain the equation for dP/dt and then find the genearl solution of P(t) with, as yet undetermined, initial value P_0. b. How large must your daughter's initial college savings be so that she can continue drawing her $50,000 income until she becomes a doctor?
Alex wants to buy a shopping complex in Vancouver 3 years after completing his Masters. The complex will cost CAD 17,000,000 and he would need a 20% down payment after 5 years. To save for the down payment, Alex could deposit one lump sum today at a 6% annual compound rate. Alternatively, Alex can wait one year and make one lump sum deposit. Will Alex need more money to deposit if she does it now or after one year? How much more is required? (Use Formula Approach)
Philip works at a nursing home as an aide and earns $27,000 a year. IF he went to school to get a nursing degree he could earn $50,000 in the first year. Philip knows this but he also knows that tuition and fees at a nearby college could cost about $45,000(total). He can get a student loan for 5% with 10 years to repay the loan. What is the total cost of the student loans?
Assume the total cost of a college education will be $350,000 when your child enters college in 15 years. You presently have $67,000 to invest.What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?
Melissa wants to retire with $45,000 per month.she needs $4,500,000 in principal at the time she retires in order to generate this amount of monthly income if the interest rate is 12%.If Melissa has 28 years before retirement and has $90,000 to invest today.What simple interest rate does she need to achieve the necessary amount of principal?

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