entersWill and Jane Sparks are establishing a college fund for their 1-year-old daughter, Jennifer. They want to save enough now to pay college tuition at the time shecollege (17 years from now). If her tuition is projected to be $40,000 for a two-year degree, what annual sinking fund payment should they establish if the annual interestis 8%?Click the icon to view the table.The annual sinking fund payment is S. (Round to the nearest cent as needed.) $1.00 Sinking Fund PaymentsPeriods14%6%8%2%1%21.0000000 1.0000000 1.0000000 1.0000000 1.0000000 1.00000000.4975124 0.4950495 0.4926108 0.4901961 0.4854369 0.48076923 0.3300221 0.3267547 0.3235304 0.3203485 0.3141098 0.30803350.2462811 0.2426238 0.2390270 0.2354900 0.2285915 0.22192080.1960398 0.1921584 0.1883546 0.1846271 0.1773964 0.17045650.1625484 0.1585258 0.1545975 0.1507619 0.1433626 0.13631540.1386283 0.1345120 0.1305064 0.1266096 0.1191350 0.11207240.1206903 0.1165098 0.1124564 0.1085278 0.1010359 0.09401480.1067404 0.1025154 0.0984339 0.0944930 0.0870222 0.08007970.0955821 0.0913265 0.0872305 0.0832909 0.0758680 0.06902950.0864541 0.0821779 0.0780774 0.0741490 0.0667929 0.060076345678Rate per period3%910114

As per the given information: Amount = $40,000Annualized rate of return (r) = 8%No. of years (n) =…

Answered: Will and Jane Sparks are establishing a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Melissa agrees to contribute $500 to the alumni fund at the end of each year for the next 7 years. Shannon wants to match Melissa's gift, but he wants to make a lump-sum contribution. If the current interest rate is 2.5% compounded annually, how much should Shannon contribute to equal Melissa's gift? (Round your answer to the nearest cent.) $
A professor has two daughters that he hopes will one day go to college. Currently, in-state students at the local University pay about $20,246.00 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 8.00% 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,…
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A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of one student each year in perpetuity at her university. To adequately prepare for the administration of the scholarship, the university will begin awarding it starting in three years. The estimated full cost of one student this year is $38,000 and is expected to stay constant in real terms in the future. If the scholarship is invested to earn an annual real return of 5 percent, how much must the donor contribute today to fully fund the scholarship?

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