Parents wanted to save enough money to send their daughter to college. The parents were unable to save money right at birth but rather started saving money when she was 5 years old and willsave until she is 18 years old. The parents would like to save up $75,000 to cover tuition and other expenses. How much would the parents need to save each month in order to meet thisrequirement Assume the parents save the money into an account that generated an interest of 2% per yearO a $360O b. 3370Oc$400Od $490

Here we will use the concept of time value of money. As per the concept of time value of money the…

Answered: Parents wanted to save enough money to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Your son just turned 4 years old. You anticipate he will start University when he turns 18. You would like to have funds in a registered education savings plan (RESP) to fund his education at that time. You anticipate he will spend 6 years in university, and it will cost $40,000 per year at the start of each school year. When he graduates (debt free) you would also like him to have $50,000 for a down payment on a condo or to travel. If the account promises to pay a fixed interest rate (APR) of 6% per year with monthly compounding, how much money do you have to deposit each quarter to ensure you will have enough when he starts university? Assume you will make the same deposit at the end of each quarter until he starts university.
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