EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 37P
Summary Introduction
To determine: Amount saved by person X at the end of next six years.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Your son Bob is 14 years old today. You are planning for his college education. Bob will start school
on his 19th birthday. You wish to set aside some money early to send Bob to four years of school.
You have decided that you will give Bob $15,000 per year for each of his first two years of college, and
$20,000 per year for each of his last two years of college. You will give these amounts to Bob at the
beginning of each school year. You will make 5 equal annual deposits to fund the account. The first
payment will be made one year from today and the last payment will be made the day Bob leaves for
college. You wish to have just enough money in the bank to fund Bob's entire education on the day
that he leaves for school. Any money that is in the aCcount will continue to earn interest while Bob is
in school. Because of a new program, the bank has agreed to give you a 10 percent, nominal
compounded annually, return on your investments throughout the entire time period. How much do
you…
Mr. J. J. Parker is creating a college fund for his daughter. He plans to make 15 yearly payments of $1500 each with the first payment deposited today on his daughter’s first birthday. Assuming his daughter will need four equal withdrawals from this account to pay for her education beginning when she is 18 (i.e. 18, 19, 20, 21), how much will she have on a yearly basis for her college career? J. J. expects to earn a hefty 12% annual return on his investment. (show work)
Cyrus Petit is planning for the day when his child Laura, will go to college. Laura has just turned 8 and plans to enter college on her eighteenth birthday. She will need $40,000 at the beginning of each year of college. Cyrus plans to give Laura a Lexus-IS as a combination graduation and twenty-second birthday present. The Lexus is expected to cost $50,000. Cyrus currently has $20,000 saved for Laura. Also, Cyrus expects to inherit $25,000 nine years from now that will be used for Laura's education. Cyrus expects to be able to earn 5 percent after-tax on any investments. Set the problem up with the aid of a time line showing each of the periods and how the cash flows are distributed. How much must Cyrus save at the end of each of the next 9 years in order to provide for Laura's education and the Lexus?
Chapter 5 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 5.A - Prob. 1PCh. 5.A - Prob. 2PCh. 5.A - Prob. 3PCh. 5.A - Prob. 4PCh. 5.A - Prob. 5PCh. 5.A - Prob. 6PCh. 5 - Prob. 1QTDCh. 5 - Prob. 2QTDCh. 5 - Prob. 3QTDCh. 5 - Prob. 4QTD
Ch. 5 - Prob. 5QTDCh. 5 - Prob. 6QTDCh. 5 - Prob. 7QTDCh. 5 - Prob. 8QTDCh. 5 - Prob. 9QTDCh. 5 - Prob. 10QTDCh. 5 - Prob. 11QTDCh. 5 - Prob. 12QTDCh. 5 - Prob. 13QTDCh. 5 - Prob. 14QTDCh. 5 - Prob. 15QTDCh. 5 - Prob. 16QTDCh. 5 - Prob. 17QTDCh. 5 - Prob. 18QTDCh. 5 - Prob. 19QTDCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - Prob. 44PCh. 5 - Prob. 45P
Knowledge Booster
Similar questions
- You plan to start saving for your son's university education. He will begin university when he turns 18 and will need $4, 000 then and in each of the following three years. You will make a deposit at the end of this year in an account, and an identical deposit at the end of each year, with the last deposit occurring when he turns 18. If an annual deposit of $1, 484 will allow you to reach your goal, how old is your son now? Assume annually compounded 6% interest in your calculation. [Please use let me know how should i use Texas Instrument BAIIPlus financial calculator to solve this problem] questionarrow_forwardYou plan to start saving for your son’s university education. He will begin university when he turns 18 and will need $4,000 then and in each of the following three years. You will make a deposit at the end of this year in an account, and an identical deposit at the end of each year, with the last deposit occurring when he turns 18. If an annual deposit of $1,484 will allow you to reach your goal, how old is your son now? Assume annually compounded 6% interest in your calculation. [Please use financial calculator to solve this problem]arrow_forwardYou are planning on having your first child next month and your parents have told you that they are going to open an account with $3,000 on the day your child is born. The money is to be used for college. You plan to also put $1,500 of your own money into the same account on the day your child is born, and then another $1,500 into the account each year on your child's birthday, through his/her 18th birthday. If the account averages an 8% annual return, what will the account balance be on your child's 18th birthday? Please use appropriate excel formula and show how you arrived at your answer.arrow_forward
- Your son just turned 4 years old. You anticipate he will start University when he turns 18. You would like to have funds in a registered education savings plan (RESP) to fund his education at that time. You anticipate he will spend 6 years in university, and it will cost $40,000 per year at the start of each school year. When he graduates (debt free) you would also like him to have $50,000 for a down payment on a condo or to travel. If the account promises to pay a fixed interest rate (APR) of 6% per year with monthly compounding, how much money do you have to deposit each quarter to ensure you will have enough when he starts university? Assume you will make the same deposit at the end of each quarter until he starts university.arrow_forwardTom and Mary James just had a baby. They heard that the cost of providing a college education for this baby will be $100,000 in 18 years. Tom normally receives a Christmas bonus of $4,000 every year in the paycheck prior to Christmas. He read that a good stock mutual fund should pay him an average of 10 percent per year. Tom and Mary want to make sure their son has $100,000 for college. Consider each of the following questions. a.How much does Tom have to invest in this mutual fund at the end of each year to have $100,000 in 18 years? b. Tom’s father said he would provide for his grandson’s education. He puts $10,000 in a government bond that pays 3 percent interest. His dad said this should be enough. Do you agree? c. If Mary has a savings account worth $50,000, how much must she withdraw from savings and set aside in this mutual fund to have the $100,000 for her son’s education in 18 years?arrow_forwardA man wants to help provide a college education for his young daughter. He can afford to invest $1500/yr for the next 5 years, beginning on the girl’s 5th birthday. He wishes to give his daughter $10,000 on her 18th, 19th, 20th, and 21st birthdays, for a total of $40,000. Assuming 6% interest, what uniform annual investment will he have to make on the girl’s 9th through 17th birthdays? PLEASE USE EXCEL SOFTWARE TO SOLVE. WOULD GIVE POSITIVE RATING.arrow_forward
- A man wants to help provide a college education for his young daughter. He can afford to invest $1500/yr for the next 5 years, beginning on the girl’s 5th birthday. He wishes to give his daughter $10,000 on her 18th, 19th, 20th, and 21st birthdays, for a total of $40,000. Assuming 6% interest, what uniform annual investment will he have to make on the girl’s 9th through 17th birthdays?arrow_forwardA young couple is planning for the education of their two children. They plan to invest the same amount of money at the end of each of the next 16 years, i.e., the first contribution will be made at the end of the year and the final contribution will be made at the time the oldest child enters college. The money will be invested in securities that are certain to earn a return of 8 percent each year. The oldest child will begin college in 16 years and the second child will begin college in 18 years. Assume each child begins school in January and each school year is a calendar year. The parents anticipate college costs of $25,000 per year (per child). These costs must be paid at the end of each year (i.e. the tuition for the oldest child’s first year of college must be paid at the end of the 17th year). If each child takes four years to complete their college degrees, then how much money must the couple save each year?arrow_forwardA father wants to help provide a college education for his young son. He can afford to invest $600/yr. for the next 4 years, beginning on the boy’s fourth birthday. He wishes to give him $4000 on her 18th, 19th, 20th, and 21st birthdays, for a total of $16,000. Assuming 5% interest, what uniform annual investment will he have to make on the son’s 8th through 17th birthdays?arrow_forward
- Cheryl and Terrell have been married for 35 years. Cheryl turned 71 on May 5, 2023, and had a big celebration. Terrell's 67th birthday is coming up on January 16, 2024. Cheryl has already started planning for his birthday. Cheryl is the financial guru in the family and knows to convert her Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund (RRIF) before December 31, 2023. She estimates that the Fair Market Value (FMV) of her RRIF on January 1, 2024, will be $792,500. She knows that her spouse's age is important in the RRIF withdrawal calculation. She estimates that Terrell's Registered Retirement Savings Plan (RRSP) investments will have a Fair Market Value on January 1, 2024, of $488,325. Based on the information Cheryl provided, what is the minimum amount she must withdraw from her RRIF amount in 2024, taking advantage of Terrell's age? Age and RRIF Factors RRIF Factors 4.00% 4.17% 4.35% 4.55% 4.76% 5.00% 5.28% 5,40% 5.53% 5.67% Age 65 66 67 68 69 70 71…arrow_forwardWhen Joe graduated from college at age 22, his grandparents established a trust fund and endowed it with $10,000. The gift is intended to serve as a retirement fund for Joe, and he will be able to draw on it when he turns 62. If the fund earns a nine percent return over that period, what will it be worth when Joe reaches age 62? [submit your answer with a comma but no dollar signs]arrow_forwardOn the day his son was born, a father decided to establish a fund for his son's college education. The father wants the son to be able to withdraw 200,000 from the fund on his 18th birthday, again on his 19th birthday, again on his 20th birthday, and again on his 21st birthday. If the fund earns interest at 9% per year, compounded annually, how much should the father deposit at the end of each year, up through the 17th year? Draw cash flow diagramarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT