How much more will your parents have to invest each year

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Question -

A) Your younger brother, Spencer, will start college in five years. He has just informed your parents he wants to go to UBC of which will cost $20,000 per year for four years (assumed to come at the end of the year). Anticipating Spender's ambitions, your parents started investing $3,000 per year five years ago and will continue to do so for five more years.

How much more will your parents have to invest each year for the next five years to have the necessary funds for Spender's education? Use 10% as the appropriate interest rate (discount rate) throughout this problem.

B) You have received an inheritance! Your funds can be either taken in the form of $40,000 at the end of each of the next 25 years (ie $1,000,000 over 25 years) or as a lump sum of $500,000 paid immediately.

Reference no: EM132983588

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