Your son Bob is 14 years old today. You are planning for his college education. Bob will start schoolon his 19th birthday. You wish to set aside some money early to send Bob to four years of school.You have decided that you will give Bob $15,000 per year for each of his first two years of college, and$20,000 per year for each of his last two years of college. You will give these amounts to Bob at thebeginning of each school year. You will make 5 equal annual deposits to fund the account. The firstpayment will be made one year from today and the last payment will be made the day Bob leaves forcollege. You wish to have just enough money in the bank to fund Bob's entire education on the daythat he leaves for school. Any money that is in the aCcount will continue to earn interest while Bob isin school. Because of a new program, the bank has agreed to give you a 10 percent, nominalcompounded annually, return on your investments throughout the entire time period. How much doyou need to deposit into the account in each of the 5 years in order to fund Bob's education? Showyour work to earn partial credit.

First, We need to compute the total amount required when BOB leaves for school. This can be computed…

one ecided that you will give Bob $15,000 per yE year for each of his last two years of colleE f each school year. You will make 5 equal a Il be made one year from today and the las wish to have just enough money in the bar

one ecided that you will give Bob $15,000 per yE year for each of his last two years of colleE f each school year. You will make 5 equal a Il be made one year from today and the las wish to have just enough money in the bar

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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Similar questions

Dean and his sister decide to begin a gardening business and will need $4000. To do so, Dean invests $800 compounded quarterly at 10% and Susan invests $1000 compounded semi-annually at 8%. How many years will it take them to accumulate the money needed for the business?
After graduation, you plan to work for Dynamo Corporation for 12 years and then start your own business. You expect to save and deposit $8,000 a year for the first 6 years (t = 1 through t = 6) and $16,000 annually for the following 6 years (t = 7 through t = 12). The first deposit will be made a year from today. In addition, your grandfather just gave you a $40,000 graduation gift which you will deposit immediately (t = o). If the account earns 9% compounded annually, how much will you have when you start your business 12 years from now? a. $324,529 b. $344,653 c. $333,819 d. $293,067 e. $342,904
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To complete your last year in business school and then go through law school, you will need $5,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $5,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 8.5% interest a sum of money that is sufficient to provide the four payments of $5,000 each. His deposit will be made today. Do not round intermediate calculations. Round your answers to the nearest cent. If your answer is zero, enter "0". How large must the deposit be? $ How much will be in the account immediately after you make the first withdrawal? After the last withdrawal? After the first withdrawal: $ After the last withdrawal: $
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II. Show clean and complete details of your work for each number. A.) Mr. Jones has P 1,000,000 that he wishes to distribute to his son at a rate ofP 100,000 per year. If the P 1,000,000 is deposited in a bank account that earns 4%interest per year, how many years will it take for his son to completely receive theaccount? B.) A new employee who is now 20 years old is planning to have personal savings totalingP 1,500,000 when he retires at the age of 60. If the annual interest rate is 8%compounded monthly over the next 40 years, how much must he save each month toaccomplish his goal?
1. The home improvement center (HIC) has an employment contract with the newly hired CEO. The contract requires a lump-sum payment of 32.4 million dollars to be paid to the CEP upon the successful completion of her first five years of service. HIC, wants to set aside an equal amount of money at the end of each year to cover this anticipated cash outflow and will earn 7,25% on the funds. How much must HIC is set aside each year for this purpose? a) 7 270 433 b)5 227 064 c)5 668 987 d) 5 606 026 e) 6 778 958
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