None Suppose you have a child and want to make sure that you have enough money to pay for their college.They were born today, will attend college 19 years from today, the tuition they will pay will increase fromits present level of $10,800 per year (at ISU) at the rate of 2% per year, and you have an instrumentavailable to you that will earn 6% per year. How much do you have to put into that instrument today topay for four years of school? Show your work.

Step 1:First, let's calculate the tuition for each of the 4 years of college: Year 1 (19 years from…

Answered: Suppose you have a child and want to…

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

You estimate a college education will be $300,000 when your child enters college in 18years. You presently have $70,000 to invest. What annual rate of interest must you earn on yourinvestment to cover the cost of your child’s college education?
Suppose you are offered an investment that will allow you to double your money in 8 years. You have R10 000 to invest. What is the implied rate of interest?Suppose you have a 1-year old daughter and you want to provide R81 000 in 19 years towards her college education. You currently have R2 000 to invest. What interest rate must you earn to have the R81 000 when you need it?Suppose you want to buy a new house. You currently have R15 000 and you figure you need to have a 10% down payment plus an additional 5% of the loan amount in closing costs. If the type of house you want costs about R150 000 and you can earn 8.1% per year, how long will it be before you have enough money for the down payment and closing costs?
You want to begin saving for your daughter’s college education and you estimate that she will need R240 000 in 17 years. If you feel confident that you can earn 7.5% per year, how much do you need to invest today?
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?
You need $3000 annually (every year=annuity) for 3 years to give to European University of Lefke to graduate. How much money should your dad deposit today in a bank paying 5% so that you will have the needed $3000 annual payments?
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Vijay
Your daughter will start college one year from today, at which time the first tuition payment of \$58,000$58,000 must be made. Assume that tuition does not increase over time and that your daughter remains in school for four years. How much money do you need today in your savings account, earning 5\%5% per annum, in order to make the tuition payments over the next four years, provided that you have to pay 35\%35% per annum in taxes on any earnings (e.g., interest on the savings)?
Your daughter will start college one year from today, at which time the first tuition payment of \$58,000$58,000 must be made. Assuming that tuition does not increase over time and that your daughter remains in school for four years, how much money do you need today in your savings account, earning 5\%5% per annum, in order to make the tuition payments over the next four years?
Your parents say they will loan you $15,000 today for college. They would like to be repaid $21,000 at the end of 10 years. What is the annual yield they will receive?
Suppose you have a 4-year-old son and you want to provide R55 000 in 16 years towards his college education. You currently have R5 000 to invest. What interest rate must you earn to have the R55 000 when you need it?
You plan to send your first born child to College for a 4-year degree with 4 annual payments. Your first payment will start in 18 years in the amount of $50,000 and grow by 15% per year. Assuming a discount rate of 6%, how much do you need to set aside today to fund your child's education? Use the $ symbol and round to the nearest thousand dollars. A correct answer would look like $34,000.

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