Reference no: EM132592578

Question 1: You are saving for junior's college is 18 years. You are saving $350 a month a you have secured an annual rate of 6%. How much will Junior have for college tuition?

Question 2: For your college graduation your rich aunt offered you three options for your graduation gift. Option A is $10,000 which you can have today. Option B is a monthly check for $62 a month for 30 years or a future amount of $76,100 available in 30 years. Assume the rate is 7%. Which option would you choose?

Question 3: Your cousin has just started saving for retirement. She is 25 and asked you to help her determine the amount she will have accumulated for retirement in 40 years. For the first 10 years she plans to contribute $3000 a year. Then in years 11-20 she plans to increase her contribution to $5000 a year. In years 21-30 she plans to contribute $10,000 a year and in the last 10 years she plans to contribute $15000 a year. Assume she gets a steady rate of 6%. How much will she have accumulated. Then compute the annual payment she will receive over the next 40 years if the wealth is converted into an annuity payment at 8%.