ur five-year old daughter has just announced that she would like to attend college. Your best guess is that it will cost approximately $25,000 per year for four years in tuition, books, rent, etc. for her to attend State College 12 years from now (first payment beginning on year 13). You believe that you can earn a rate of 9% on investment to meet this goal. a. If you were to invest a lump sum today in hopes of covering your daughter’s college costs, how much would you have to invest? b. If you now decided to invest annually instead, how much would you have to invest every year? (investment every year, years 1-12) c. You just learned of a $10,000 inheritance and plan to invest it in your daughter’s college fund (inheritance is available today at time 0). Given this new source of funds how much do you have to invest every year? d. Create a combo box that will switch provide the user with 5 different inheritance amounts ($8,000, $9,000, $10,000, $11,000 and $12,000)

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
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Your five-year old daughter has just announced that she would like to attend college. Your best

guess is that it will cost approximately $25,000 per year for four years in tuition, books, rent,

etc. for her to attend State College 12 years from now (first payment beginning on year 13). You

believe that you can earn a rate of 9% on investment to meet this goal.

 

a. If you were to invest a lump sum today in hopes of covering your daughter’s college

costs, how much would you have to invest?

b. If you now decided to invest annually instead, how much would you have to invest every

year? (investment every year, years 1-12)

c. You just learned of a $10,000 inheritance and plan to invest it in your daughter’s college

fund (inheritance is available today at time 0). Given this new source of funds how much

do you have to invest every year?

d. Create a combo box that will switch provide the user with 5 different inheritance

amounts ($8,000, $9,000, $10,000, $11,000 and $12,000)

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