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A fther is planning to give some extra pocket money to his 12-year-old son. He asks his son if he would like the amount right now or if he would rather wait for a week, which is around the time his school is organizing a picnic. The son chooses to take the allowance right away rather than wait for a whole week. This scenario is an example of
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- Cyrus Petit is planning for the day when his child Laura, will go to college. Laura has just turned 8 and plans to enter college on her eighteenth birthday. She will need $40,000 at the beginning of each year of college. Cyrus plans to give Laura a Lexus-IS as a combination graduation and twenty-second birthday present. The Lexus is expected to cost $50,000. Cyrus currently has $20,000 saved for Laura. Also, Cyrus expects to inherit $25,000 nine years from now that will be used for Laura's education. Cyrus expects to be able to earn 5 percent after-tax on any investments. Set the problem up with the aid of a time line showing each of the periods and how the cash flows are distributed. How much must Cyrus save at the end of each of the next 9 years in order to provide for Laura's education and the Lexus?Cecilia is 28 years old today and wants to retire at age 65. She plans to put $5,000 into an account at the end of every year starting at the end of this year and continuing until her 65th birthday. When she reaches age 65, she plans to withdraw the money in equal amounts at the beginning of every year. She assumes she will live until age 90 and make her last withdrawal on her 90th birthday. How big will each withdrawal be if she earns 9% on her investments? $143,358.86. $130,112.13. $120,661.86. $119,368.93.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.
- Your grandfather wants to establish a scholarship in his father's name at a local university and has stipulated that you will administer it. As you've committed to fund a $15,000 scholarship every year beginning one year from tomorrow, you'll want to set aside the money for the scholarship immediately. At tomorrow's meeting with your grandfather and the bank's representative, you will need to deposit (rounded to the nearest whole dollar) so that you can fund the scholarship forever, assuming that the account will earn 4.50% per annum every year. Oops! The bank representative just reported that he misquoted the available interest rate on the scholarship's account. Your account should earn 7.00%. The amount of your required deposit should be revised to relationship between the interest rate earned on the account and the present value of the perpetuity. This suggests there is38. Frank Chang is planning for the day when his child , Laura , will go to college . Laura has just turned eight and plans to enter college on her 18th birthday . She will need $ 25,000 at the beginning of each year in school . Frank plans to give Laura a Mercedes - Benz as a combination graduation and 22nd birthday present . The Mer cedes is expected to cost $ 55,000 . Frank currently has $ 10,000 saved for Laura . Also , Frank expects to inherit $ 25,000 nine years from now that will be used for Laura's education . Frank expects to be able to earn 7 percent after tax on any invest ments . How much must Frank save at the end of each of the next 10 years in order to provide for Laura's education and the Mercedes ?Linda is 10 years old. Her parents want to save for 4 years of college, starting at 18. Her parents want to deposit X today and on birthdays 11,12, …. 17. On birthdays 18, 19, 20, 21 they plan to take out $20,000 – the total cost of education. How much do her parents need to save each year? Assume the discount rate is 10%. Solve the following ways:Using trial and error, is the $4,000/per year enough? Using Goal Seek, solve for the annual deposit necessary to meet their financial goals.
- Ann’s grandmother put some money in an account for her on the day she was born. She is now 18 years old and is allowed to withdraw the money for the first time. The account currently has Ksh400,000 in it and pays an 8% per annum interest rate.i. Calculate how much money would be in the account if she left the money there until her 70th birthday.When Steven was 5 years old (on his birthday), his grandmother decided to set up a trust account to pay for his college education. She wanted the account to grow to $100,000 by his 18th birthday. If she was able to invest her money at 7% per year, how much did she have to deposit into this trust account? (Note: The amount deposited is known as the present value of the investment. The $100,000 is known as the future value. Round your answer to the nearest cent.)30 After reviewing her financial affairs, Jasmine has determined that she would like the $75,000 death benefit from one of her insurance policies to go to a local registered charity. The whole life policy in question has a $45,000 cash surrender value (CSV) and she pays an annual premium of $500. Jasmine's current cash flow situation is quite good. She is living a comfortable retirement. However, she is worried as she has assets, that of the taxes that will be payable after her death will result in considerable capital gains. She is unable to purchase a new life insurance to cover the income tax triggered at death because of her health. What should Jasmine do to fulfill her desire to donate $75,000 to the registered charity and alleviate the taxes payable following her death? NVBDQncreUJQWW1 Ya0w4cWZjYVhIQT09 → a. O Surrender the life insurance policy and donate the CSV. b. O Name the registered charity as beneficiary of the life insurance policy. c. O Assign the life insurance policy…
- 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.On January 1, you plan to take a trip around the world upon graduation four years from now. Your grandmother wants to deposit sufficient funds for this trip in an investment account for you. On the basis of a budget, you estimate that the trip currently would cost $15,000. Being the generous and sweet lady she is, your grandmother decided to deposit $3,500 in the fund at the end of each of the next four years, starting on December 31, 2021. The account will earn 6 percent annual Interest, which will be added to the account at each year-end. (Future Value of $1. Present Value of $1. Future Value Annulty of $1. Present Value Annulty of $1, Financial Calculator) (Use tables, Excel, or a financial calculator.) Required: 1. How much money will you have for the trip at the end of year 4 (1.e., after four deposits)? 2. What is the total amount of Interest earned over the four years? 3. How much Interest revenue did the fund earn in each of the four years, starting in 2021? Complete this…Amy makes her first $15,000 payment into a conservative savings plan, earning 8% per year into her savings account when she is 28 years old. After the 10th payment, Amy makes no additional payments nor does she withdraw any money from the account. One of Amy's friends, Frank, starts a savings plan that is identical to Amy's when he is 38 years old (Frank's account also earns 8% per year). He continues making $15,000 annual payments until he is 60 years old. If both Amy and Frank retire when they are 60 years old, who will have more money in their savings plan at that time?
