You are saving for the college education of your two children. They are two years apart in age; one will begin college 18 years from today, and another child will begin 20 years from today. You estimate the college expenses to be $40000 per year per child. Given r = 20% p.a. compounde monthly is the hurdle rate for calculations. College expenses are paid at the beginning of each school year. How much money must you deposit in an account each year (in what range will the answer be in $) to fund your children's education? Your deposits begin one year from today. You will make the last deposit at the end of the 16th year. Assume five years of college.
You are saving for the college education of your two children. They are two years apart in age; one will begin college 18 years from today, and another child will begin 20 years from today. You estimate the college expenses to be $40000 per year per child. Given r = 20% p.a. compounde monthly is the hurdle rate for calculations. College expenses are paid at the beginning of each school year. How much money must you deposit in an account each year (in what range will the answer be in $) to fund your children's education? Your deposits begin one year from today. You will make the last deposit at the end of the 16th year. Assume five years of college.
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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Transcribed Image Text:You are saving for the college education of your two children. They are two years apart in age;
one will begin college 18 years from today, and another child will begin 20 years from today. You
estimate the college expenses to be $40000 per year per child. Given r = 20% p.a. compounded
monthly is the hurdle rate for calculations. College expenses are paid at the beginning of each
school year. How much money must you deposit in an account each year (in what range will the
answer be in $) to fund your children's education? Your deposits begin one year from today. You
will make the last deposit at the end of the 16th year. Assume five years of college.
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