Two years ago my daughter was born. On the day she was born I put $3000 into an account for her. The account earned 4.5% annually. That rate of return on the account will be fixed until she turns 10, at which point I will transfer whatever is in that account into a new one which is expected to earn 8% per year, and then l'll leave that money in that account until her 18th birthday. I plan to take her to Italy to visit her nona when she turns 16. I expect that trip to cost $5000 and I intend to withdraw that amount from the account. How much will be left for her on her 18th birthday (within $5 of the solution below)? Note: I used equations rather than factor tables for my solution. 2791.31 2781.31 2771.31 2761.31 None of the above

Two years ago my daughter was born. On the day she was born I put $3000 into an account for her. The account earned 4.5% annually. That rate of return on the account will be fixed until she turns 10, at which point I will transfer whatever is in that account into a new one which is expected to earn 8% per year, and then l'll leave that money in that account until her 18th birthday. I plan to take her to Italy to visit her nona when she turns 16. I expect that trip to cost $5000 and I intend to withdraw that amount from the account. How much will be left for her on her 18th birthday (within $5 of the solution below)? Note: I used equations rather than factor tables for my solution. 2791.31 2781.31 2771.31 2761.31 None of the above

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

Your cousin is currently 12 years old. She will be going to college in 6 years. Your aunt and uncle would like to have $90,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 4.2% per year, how much money do they need to put into the account today to ensure that they will have $90,000 in 6 years?
Adele is planning for retirement. She would like to have $75,000 in her hand at the beginning of her first year of retirement at age 65 to live on for the year. She estimates that the amount will have to grow by 6% every year to keep up with inflation. What APR (nominal rate per year) should her retirement account earn if it is compounded continuously? She plans to deposit $21,000 on her 40th birthday and plans to keep increasing the deposits by 6% every year and till her 64th birthday. She estimates her life expectancy to be 85, meaning she would like to have the last retirement payment on her 85th birthday.
13) Rachel wants to take a trip to England in 3 years, and she has started a savings account today to pay for the trip. Today (8/1/02) she made an initial deposit of $1,000. Her plan is to add $2,000 to the account one year from now (8/1/03) and another $3,000 to the account two years from now (8/1/04). The account has a nominal interest rate of 7 percent, but the interest is compounded quarterly. How much will Rachel have in the account three years from today (8/1/05)?
Your daughter is currently 9 years old. You anticipate that she will be going to college in 9 years. You would like to have $107,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 12% per year, how much money do you need to put into the account today to ensure that you will have $107,000 in 9 years? Your deposit today should be $ (Round to the nearest dollar.)
Your sister turned 35 today, and she is planning to save $60,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund that's expected to provide a return of 7.5% per year. She plans to retire 30 years from today, when she turns 65, and she expects to live for 25 years after retirement, to age 90. Under these assumptions, how much can she spend each year after she retires? Her first withdrawal will be made at the end of her first retirement year. a. $266,770.46 b. $556,561.79 c. $598,303.93 d. $517,731.90 e. $248,158.57
You want to leave a small amount for two of your children, Kira, aged 68 and Fred, aged 63. Kira will retire at 70 (t = 2), as will Fred (t = 7). You want each to have $500,000 per year for the rest of their lives, payable at the beginning of each year. You expect each to live to 95. The annual interest rate is expected to be 9%. How much money would you need to deposit today in an account to fund these kids' retirement?
Your cousin is currently 8 years old. She will be going to college in 10 years. Your aunt and uncle would like to have $95,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 4.3% per year, how much money do they need to put into the account today to ensure that they will have $95,000 in 10 years? The amount they need to put away today is $ (Round to the nearest cent.)
You receive a $5,000 check from your grandparents for graduation. You decide to save it toward a down payment on a house. You invest it earning 8% per year and you think you will need to have $10,000 saved for the down payment. How long will it be before the $5,000 has grown to $10,000 ? To double the money you received from your grandparents, it will take years. (Round to one decimal place.)
Arnold and Helene would like to visit Austria in two years to celebrate their 25th wedding anniversary. Currently, the couple has saved $27,000, but they expect the trip to cost $31,000. If they put $27,000 in an account that earns 7% interest, compounded annually, will they be able to pay for the trip in two years?
Lauren is the proud mother of a new baby girl and plans tosend her daughter to college 19 years from now. Lauren wants tomake a deposit each summer in a special account at her bank whichpays 8% (compounded annually) so that she will have enough moneyset aside that she can withdraw $21,000 at the beginning of eachyear to pay tuition, room and board, etc., for each year of herfour-year education. How much will Lauren have to deposit at theend of each year in order to have enough to pay for her daughter's education?
An electrical engineer who is anticipating paying for his daughter’s college education plans to start depositing money now (year 0) and continue through year 17. If he deposits $5000 each year, how much will his daughter be able to withdraw each year starting in year 18 and continuing through year 22? Assume the account earns interest at 8% per year.
Your friend is celebrating her 35th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $130,000 from her savings account on each birthday for 24 years following her retirement, the first withdrawal will be on her 66th birthday. Your friend intends to invest her money at 10.7% interest per year. How much money must she accumulate by the time she retires in order to make these withdrawals? (Round your answer to the nearest dollar)

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