Annually with semi-annual compounding

Assignment Help Financial Accounting

Reference no: EM131213349

Joe and Bob both want to create a college fund for their children who each just turned 4 years old today, and will start college right after their 18th birthday. They choose different approaches.

approach a) Joe decides to set aside semi-annual payments of $7,974 into a fund guaranteed to earn 10% annually with semi-annual compounding, starting 6 months from today and continuing until he makes the last payment when his child turns 18 years old. Draw a cash flow diagram, set up the interest factor equation that represents the cash flow, and solve for the future worth of the college fund.

Approach B) Bob decides to set aside $60,000 today in an investment portfolio guaranteed to earn 5% annually and which he does not touch again until his child turns 18 years old. Draw a cash flow diagram, set up the interest factor equation that represents the cash flow, and solve for the future worth of the college fund.

Who has the larger college fund when their child turns 18?

Reference no: EM131213349

Questions Cloud

What is the total resistance for each of the three groupings : Five 470 Ω, ten 1000 Ω, and two100 Ω resistors are all connected in parallel. What is the total resistance for each of the three groupings?

Bottom up analysis of companies current financial situation : HA1022 - Principals of Financial Markets Group Assignment - Conduct a Top Down analysis of the overall economic environment and consider how forecast changes in economic fundamentals will impact on the performances of companies in the industry your..

How do coding and modulation work : How do coding and modulation work with spread-spectrum and ODFM? This project will be helpful in analysing the differences and synthesizing the similaries.

Creating the logic for a new program : When creating the logic for a new program, which is the best way to go about it, pseudo code or flowcharts?

Annually with semi-annual compounding : Joe and Bob both want to create a college fund for their children who each just turned 4 years old today, and will start college right after their 18th birthday. They choose different approaches. Joe decides to set aside semi-annual payments of $7,97..

What is the value of each resistor : Four equal-value resistors are connected in parallel. Five volts are applied across the parallel circuit, and 1.11 mA are measured from the source. What is the value of each resistor?

Identifying and documenting it acquisition requirements : What are the one or two most challenging issues in identifying and documenting IT acquisition requirements (i.e., the requirements for solving the problem that was defined)? Explain your reason(s) and how the issue(s) can be successfully addressed..

Compute the budgeted gross profit : Suppose Kitchen HelpersKitchen Helpers manufactures cast iron skillets. One model is a? 10-inch skillet that sells for $36. Kitchen HelpersKitchen Helpers projects sales of 550 ?10-inch skillets per month. The production costs are $8 per skillet for ..

Association contacts companies : Companies that lease a box have the right to renew their leases each year, but they often do not. When a lease for a box opens up, the association contacts companies that previously held leases to see if they want to lease one again.

User Account

All Pages