The parents of Hala saved an amount of AED 20,000 to cover her university costs and expected to grow 5 percent per year. The saving amount will be invested in an account paying 8% interest, what is the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education

The parents of Hala saved an amount of AED 20,000 to cover her university costs and expected to grow 5 percent per year. The saving amount will be invested in an account paying 8% interest, what is the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education

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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Question

The parents of Hala saved an amount of AED 20,000 to cover her university costs and

expected to grow 5 percent per year. The saving amount will be invested in an account paying

8% interest, what is the amount of money she will need to have available at age 18 to pay for all

four years of her undergraduate education

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A professor has two daughters that he hopes will one day go to college. Currently, in-state students at the local University pay about $20,295.00 per year (all expenses included). Tuition will increase by 4.00% per year going forward. The professor's oldest daughter, Sam, will start college in 16 years, while his youngest daughter, Ellie, will begin in 18 years. The professor is saving for their college by putting money in a mutual fund that pays about 9.00% per year. Tuition payments are at the beginning of the year and college will take 4 years for each girl. (Sam's first tuition payment will be in exactly 16 years) The professor has no illusion that the state lottery funded scholarship will still be around for his girls, so how much does he need to deposit each year in this mutual fund to successfully put each daughter through college. (ASSUME that the money stays invested during college and the professor will make his last deposit in the account when Sam, the OLDEST daughter,…
Ali deposits BD 2,500 in a savings account that pays interest at the rate of 5.5% per year, compounded annually. If all of the money is allowed to accumulate, how much money will the student have after 14 years?
A father is now planning a savings program to put hisdaughter through college. She is 13, plans to enroll at the university in 5 years, and shouldgraduate 4 years later. Currently, the annual cost (for everything—food, clothing, tuition,books, transportation, and so forth) is $12,000, but these costs are expected to increase by6% annually. The college requires total payment at the start of the year. She now has $10,000in a college savings account that pays 9% annually. Her father will make six equal annualdeposits into her account; the first deposit today and the sixth on the day she starts college.How large must each of the six payments be? (Hint: Calculate the cost (inflated at 6%) foreach year of college and find the total present value of those costs, discounted at 9%, as ofthe day she enters college. Then find the compounded value of her initial $10,000 on thatsame day. The difference between the PV of costs and the amount that would be in the savingsaccount must be made up by the…
To pay his university education, Mr. Ahmed is saving $ 1000, at the beginning of each year for the next 7 years in a Bank Muscat account paying 10% interest rate. How much will Mr. Ahmed have in that account at the end of 7th year? Mr. Ahmed need $ 17000 to pay his university fees in future, justify your suggestion to him regarding his investment in Bank Muscat?

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