+1-415-670-9189
info@expertsmind.com
Assuming college savings are invested in account paying
Course:- Financial Management
Reference No.:- EM13847217




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Financial Management

Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child’s college education. The couple expects tuition, books and living expenses to cost $60,000 per year in their child’s first year, and to increase at 4% per year for four years. Assume college payments are made at the end the year (i.e. the freshman payment is made at the end of freshman year, etc.) and that the baby will start college on her 18th birthday.

a) Assuming college savings are invested in an account paying 7% interest, then what is the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education if the parents don’t want to save any more after her 18th birthday?

b) The couple plans to start saving at the end of the year (i.e. on the child’s first birthday) and to save through the 18th birthday. How much do they need to save every year to have enough money in 18 years to pay for college? (they will not save any more after the 18th birthday)

c) If the couple plans to make one savings deposit every TWO years, starting on the child’s second birthday and ending on her 18th birthday, how much will they need to save every two years?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Baxter Corporation Sales for 2013 were $280,000, and the cost of goods sold was 55 percent of sales. Selling and administrative expense was $28,000. Depreciation expense was 1
An investor purchased a bond that has a coupon rate of 8% paid quarterly, face value $1000, and maturing in 30 years. The purchasing price was $850 and had 20 years to maturit
Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $316,000 per year. You believe the technology used in the machine has a
Paul will be able to save $400 per month for the indefinite future.- If Paul can earn 8% on his savings, how long will it take him to accumulate the required down payment?
Diversification occurs when stocks with low correlations of returns are placed together in a portfolio. Identify at least one type of firm that might exhibit low correlations
Revelation Co. just paid its annual dividend of $3.3 per share. The company has been reducing the dividends by 7.9 percent each year. How much are you willing to pay today to
Suppose Japanese yen money market annual rate is .60% and U.S. money market has an annual rate of 4.50%. The predictions on the spot rate in 6 months made by financial analyst
A local dental practice decides to run a Groupon campaign. The campaign offered $350 worth of dental services (such as teeth whitening) for $145. For the total campaign, 255 c