Investment to cover the cost of your child college education

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Reference no: EM132003258

1. A firm does not pay a dividend. It is expected to pay its first dividend of $0.30 per share in 2 years. Starting following year, this dividend will grow at 10 percent indefinitely. Using a 12 percent discount rate, compute the value of this stock.

2. Assume the total cost of a college education will be $300,000 when your child enters college in 18 years. You presently have $74,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?

3. Jefferson was born on 02/01/1951 and passed away on 02/28/2018. He was 67 when he passed. Jane his wife was born on 06/20/1954 she was 63 when her husband passed away. What distribution option is available to her that would allow her to defer to the latest date?

Reference no: EM132003258

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