Your parents have accumulated a $160,000 nest egg. They have been planning to use this money to pay college costs to be incurred by you and your sister, Courtney. However, Courtney has decided to forgo college and start a nall salon. Your parents are giving Courtney $31,000 to help her get started, and they have decided to take year-end vacations costing $11,000 per year for the next four years. Use 9 percent as the appropriate interest rate throughout this problem. Use Appendix A and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. How much money will your parents have at the end of four years to help you with graduate school, which you will start then? (Roum your final answer to 2 decimal places.) Funds available for graduate school b. You plan to work on a master's and perhaps a PhD. If graduate school costs $29,260 per year, approximately how long will you be able to stay in school based on these funds? (Round your final answer to 2 decimal places.) Number of years

Your parents have accumulated a $160,000 nest egg. They have been planning to use this money to pay college costs to be incurred by you and your sister, Courtney. However, Courtney has decided to forgo college and start a nall salon. Your parents are giving Courtney $31,000 to help her get started, and they have decided to take year-end vacations costing $11,000 per year for the next four years. Use 9 percent as the appropriate interest rate throughout this problem. Use Appendix A and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. How much money will your parents have at the end of four years to help you with graduate school, which you will start then? (Roum your final answer to 2 decimal places.) Funds available for graduate school b. You plan to work on a master's and perhaps a PhD. If graduate school costs $29,260 per year, approximately how long will you be able to stay in school based on these funds? (Round your final answer to 2 decimal places.) Number of years

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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James and Tanisha are saving for their daughter Nalah's college education. Nalah just turned 10 (at t = 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $16,000 a year, but they are expected to increase at a rate of 3.5% a year. Nalah should graduate in 4 years--if she takes longer or wants to go to graduate school, she will be on her own. Tuition and other costs will be due at the beginning of each school year (at t = 8, 9, 10, and 11). So far, James and Tanisha have accumulated $14,000 in their college savings account (at t = 0). Their long-run financial plan is to add an additional $6,000 in each of the next 4 years (at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 10%. How large must the annual payments at t = 5, 6, and 7 be to cover Nalah's anticipated college costs? O a. $3,501.99 O O b.…
Laura wants to buy a delivery truck. The truck costs $59,000, and will allow her to increase her after tax profits by $33,000 per year for the next 10 years. She will borrow 98% of the cost of the truck for 10 years, at an interest rate of 6%. Laura's unlevered cost of capital is 11% and her tax rate is 39%. The loan includes a $2,000 application fee. What is the NPV of buying the truck on these terms? Please use the APV method.
The Jeffersons have asked you what would be needed to fund the children’s future college costs. Assume each child will begin college at age 18 and graduate in four years. Assume current costs are $24,000 per year and are expected to increase by 5% per year and investments earn 7%. A. Assuming no existing assets are dedicated to college, what is the annual savings amount required to fund the children’s education? The Jeffersons’ goal is to have an amount at the beginning of the freshman year for each child that is sufficient to fund a serial payment covering the $24,000 of current costs of college adjusted for inflation for each of the four years of college. Please include your calculator keystroke inputs [PV, I/YR, N, FV, and PMT (if needed)] for each step of this calculation. Also include whether any PMTs are in the end mode or the begin mode. B. What would you say to the Jeffersons about their education funding situation? Write a script of a single paragraph as if you…
Justin and Kennedy are saving for their daughter Aliyah's college education. Aliyah just turned 10 (at t = 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $15,000 a year, but they are expected to increase at a rate of 2.5% a year. Aliyah should graduate in 4 years--if she takes longer or wants to go to graduate school, she will be on her own. Tuition and other costs will be due at the beginning of each school year (at t = 8, 9, 10, and 11). So far, Justin and Kennedy have accumulated $10,000 in their college savings account (at t = 0). Their long-run financial plan is to add an additional $5,500 in each of the next 4 years (at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 8%. How large must the annual payments at t = 5, 6, and 7 be to cover Aliyah's anticipated college costs? a. $5,960.00 b.…
John and Daphne are saving for their daughter Ellen's college education. Ellen just turned 10 (at t= 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $14,500 a year, but they are expected to increase at a rate of 3.5% a year. Ellen should graduate in 4 years--if she takes longer or wants to go to graduate school, she will be on her own. Tuition and other costs will be due at the beginning of each school year (at t = 8, 9, 10, and 11). So far, John and Daphne have accumulated $14,000 in their college savings account (at t= 0). Their long-run financial plan is to add an additional $5,000 in each of the next 4 years (at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 9%. How large must the annual payments at t = 5, 6, and 7 be to cover Ellen's anticipated college costs? a. $3,326.86 b. $2,970.41 C.…
Laura wants to buy a delivery truck. The truck costs $142,000 , and will allow her to increase her after tax profits by $33,000 per year for the next 10 years. She will borrow 100% of the cost of the truck for 10 years, at an interest rate of 6%. Laura’s unlevered cost of capital is 15% and her tax rate is 32%. The loan includes a $1,000 application fee. What is the NPV of buying the truck on these terms?
Suppose that you need $30,000 for your last year of college. You could go to a private lending institution and apply for a signature student loan; rates range from 7% to 14%. However, your Aunt Sally is willing to loan you the money from her retirement savings, with no repayment until after graduation. All she asks is that in the meantime you pay her each month the amount of interest that she would otherwise get on her savings (since she needs that to live on), which is 4%.What is your monthly payment to her, and how much interest will you pay her over the year (9 months)?(Fill in the blanks below and give your answers as whole numbers.)The amount of interest per month you would pay Aunt Sally is $__(1)__ .The total interest you will pay her over the year (9 months)is $__(2)__ .
Your parents have accumulated a $120,000 nest egg. They have been planning to use this money to pay college costs to be incurred by you and your sister, Courtney. However, Courtney has decided to forgo college and start a nail salon. Your parents are giving Courtney $15,000 to help her get started, and they have decided to take year-end vacations costing $10,000 per year for the next four years. How much money will your parents have at the end of four years to help you with graduate school? You plan to work on a master's and perhaps a PhD. If graduate school costs $26,353 per year, approximately how long will you be able to stay in school based on these funds? Use 9 percent as the appropriate interest rate throughout this problem. Round all values to whole numbers. Refer to this information to solve the rest of the questions. What are the funds available after the Nail Salon? ○ $100,000 ○ $105,000 ○ $72,000 $98,500 What is the Present Value of the vacations? $32,397 $37,900 $45,000…
Karen wishes to buy a gift for her parents' golden wedding anniversary. She decided to deposit a consistent amount of money every week into her savings account at an interest rate of 1.5% and made a decision not to withdraw any amount from the account. If her goal is to save $350,000 for 3 years, how much money does she need to deposit each week to reach her goal?
Nathan and Jordan are saving for their daughter Kaliah's college education. Kaliah just turned 10 (at t = 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $14,500 a year, but they are expected to increase at a rate of 3.5% a year. Kaliah should graduate in 4 years--if she takes longer or wants to go to graduate school, she will be on her own. Tuition and other costs will be due at the beginning of each school year (at t = 8, 9, 10, and 11). So far, Nathan and Jordan have accumulated $12,000 in their college savings account (at t = 0). Their long-run financial plan is to add an additional $5,500 in each of the next 4 years (at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 10%. How large must the annual payments at t = 5, 6, and 7 be to cover Kaliah's anticipated college costs? O a. $3,779.16 O b.…
Mavis never went to university, so when her daughter, Charita was to go to university, Mavis wanted to ensure that she had sufficient savings. Charita starts university tomorrow. Mavis' goal is for savings today that cover four years of $25,000 per year for tuition (to be paid at the beginning of the year), plus a lump sum of $50,000 available at the beginning of the 5th year to cover further studies. How much does Mavis have in available funds, assuming a discount rate of 7%, compounded semi-annually? Question 8Select one: a. $128,431 b. $ 122,417 c. $125, 907 d. $124, 695
Ms. Beeblebrox would like to save for her son's education by making monthly deposits of $60 at the end of every month starting when her son is born until he reaches 11 years old. She won't make any more contributions starting on her son's 11th. When her son turns 18 years old, she will use the funds to provide beginning of months payments for the next 5 years. Using an interest rate of J12=8%. Calculate the value of the payments

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