* Your answer is incorrect. Abe has learned that his great-aunt intends to give him $2,000 each year he is studying at university. Tuition must be paid in advance, so Abe would like to receive his payments at the beginning of each school year. How much will his great-aunt have to invest today at 5 percent to make the four annual (start-of-year) payments? Assume that Abe will be starting school in five years. (Round answer to 2 decimal places, e.g. 125.12. Do not round your intermediate calculations.) Amount that must be invested today 7091.90

* Your answer is incorrect. Abe has learned that his great-aunt intends to give him $2,000 each year he is studying at university. Tuition must be paid in advance, so Abe would like to receive his payments at the beginning of each school year. How much will his great-aunt have to invest today at 5 percent to make the four annual (start-of-year) payments? Assume that Abe will be starting school in five years. (Round answer to 2 decimal places, e.g. 125.12. Do not round your intermediate calculations.) Amount that must be invested today 7091.90

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 6E

See similar textbooks

Related questions

Q: 3. Give your answers to parts (a) to (e) to the nearest dollar. On Jake's 16th birthday his parents…

A: The future value of cash flow depends on the actual amount to be received and the interest rate of…

Q: Holly Krech is planning for her retirement, so she is setting up a payout annuity with her bank. She…

A: Given: Holly Krech is planning for her retirement, so she is setting up a pay-out annuity with her…

Q: Can you please help me work out this problem in detail? Tony Ring wants to attend Northeast…

A: We need to use the concept of time value of money to solve the question. According to the concept of…

Q: A couple plans to save for their child's college education. What principal must be deposited by the…

A: Time value of money: The value of money changes with time. It is the concept that worth of a dollar…

Q: John and Jessica are saving for their child's education. Their daughter is currently eight years old…

A: GIVEN large must the annual payments be in the subsequent 6 years (t = 5, 6, 7, 8, 9, and 10) to…

Q: A father wants to help provide a college education for his young son. He can afford to invest…

Q: Despite his relative youth, Samuel Hunter has started planning for his retirement. At present, he…

A: Given: Annual investment = $6100 Period, n = 40 years Interest rate, r = 4% a. The accumulated…

Q: 1. Phil Nelson anticipates he will need approximately $227,000 in 11 years to cover his daughter's…

A: As per Bartleby guidelines, If multiple questions are posted, only the first 1 question will be…

Q: Tony Ring wants to attend Northeast College. He will need $65,000 4 years from today. Assume Tony's…

A: Solution:- When an amount is invested somewhere, it earns interest on it. The amount initially…

Q: Leon and Heidi decided to invest $2,500 annually for only the first eight years of their marriage.…

A: Amount invested annually “PMT” = $2500 Number of years of investment “n” = 8 Annual rate “r” = 8%…

Q: Your daughter will start college one year from today, at which time the first tuition payment of…

A: We need to use present value of annuity formula to calculate the amount that you need today in your…

Q: Assume the total cost of a college education will be $380,000 when your child enters college in 16…

A: Future Value = Present value * (1+rate)^n Where, n = no. of years

Q: Starling wants to retire with $1,950,000 in his retirement account exactly 36 years from today. He…

A: Deposit each year refers to the amount that is being deposited each year for the repayment of the…

Q: Paul Havlik promised his grandson Jamie that he would give him $7,300 5 years from today for…

A: We need to use present value table to solve this problem. Present value =Future value*Present value…

Q: Assume the total cost of a college education will be $250,000 when your child enters college in 17…

A: Using excel RATE function

Q: A mother wishes to set up a savings account for her son's education. She plans on investing $750…

A: Future value of ordinary annuity computes the total amount of periodic payments at a certain time…

Question

x Your answer is incorrect.
Abe has learned that his great-aunt intends to give him $2,000 each year he is studying at university. Tuition must be paid in
advance, so Abe would like to receive his payments at the beginning of each school year. How much will his great-aunt have to
invest today at 5 percent to make the four annual (start-of-year) payments?
Assume that Abe will be starting school in five years. (Round answer to 2 decimal places, e.g. 125.12. Do not round your intermediate
calculations.)
Amount that must be invested today
7091.90

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Computation of Present Value

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Mike estimates that college tuition at State University will be $25,000 per year in five years. If Mike can earn six percent compounded semi-annually, how much must he deposit today in order, to fund his son's first year tuition in five years? Select one: A. $18,603 B. $18,683 C. $20,428 D. $20,508 Only typing answer Please answer explaining in detail step by step without table and graph thankyou
Ted and Alice Hansel have a son who will begin college 10 years from today. School expenses of $48,000 will need to be paid at the beginning of each of the four years that their son plans to attend college. What is the duration of this liability to the couple if they can borrow and lend at the market interest rate of 10.8 percent? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.) Answer is complete but not entirely correct. 10.09238 Duration
A couple plans to save for their child's college education. What principal must be deposited by the parents when their child is born in order to have $41,000 when the child reaches the age of 18? Assume the money earns 7% interest, compounded quarterly. (Round your answer to two decimal places.)$ ??
thank you, this question please
A couple plans to save their child's college education. What principal must be deposited by the parents when their child is born in order to have 39,000$ when the child reaches the age of 18? Assume the money earns 8%!interest, compounded quarterly. Round answer to two decimal places.
Norm Legend has been awarded a scholarship from Canmore College. For the next 10 years, he will receive $4,500 for tuition and books at the beginning of each year. How much must the school set aside now in an account earning 19% interest compounded annually to pay Norm's scholarship? Round your answer to the nearest cent. Do not round intermediate calculations.
Subject: acounting
Thanks
Tony Ring wants to attend Northeast College. He will need $50,000 6 years from today. Assume Tony's bank pays 6% interest compounded semiannually. What must Tony deposit today so he will have $50,000 in 6 years? (Do not round intermediate calculations. Round your answer to the nearest cent.) Amount to be deposited
1. Phil Nelson anticipates he will need approximately $227,000 in 11 years to cover his daughter's college bills for a 4-year degree. How much would he have to invest today, at an interest rate of 10 percent compounded semiannually? 2. Jennifer deposited $54,000 at Bank of America at 20% interest compounded quarterly. a) What is the effective rate (APY)? b) What will Jennifer's balance be in a year? a) APY (rounded to nearest tenth) b) Balance in one year 3. Crystal deposited $16,000 in a new savings account at 7% interest compounded semiannually. At the beginning of year 4, Crystal deposits an additional $41,000 at 7% interest compounded semiannually. At the end of 6 years, what is the balance in Crystal's account?
Alex will need $9860 per year for four years to support his daughters university tuition (first tuition is paid at the beginning of the 11th year). How much will Alex have to invest at the beginning of each year for the 10 years before his daughter begins her studies if their savings earn compound interest at 6 percent per year? A)$2,378.49 B)$2,593.46 C)$2,697.47 D)$2,400.74 E)$2,544.78
Joe plans to set aside money for his young daughter's college tuition. He will deposit money in an ordinary annuity that earns 4.8% interest, compounded quarterly. Deposits will be made at the end of each quarter. 00 E₂ How much money does he need to deposit into the annuity each quarter for the annuity to have a total value of $72,000 after 14 years? ▷ 4 Do not round intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas. $ X S