Reference no: EM132444374
It is September 1, 2010 and Richard Spender has a problem... HE SPENDS TOO MUCH! Richard has managed to rack up some impressive debts over the past few years; however, he has another problem. He has four kids: a 14 year old son, a 13 year old daughter, and twins (a boy and a girl) aged 11 who will all be going to university. Each child will begin university in September of the year they turn 18 (so for his 14 year old son, there are exactly 4 years to go, for his 13 year old daugter there are 5 years to go, and for his twins there are 7 years to go). Each child will require $5,310 per year for four years, for tuition payments payable each September. Richard would like to set up a savings plan to cover this expense. As his Financial Advisor, you can offer him an interest rate of 3% compounded monthly for a college savings plan. However, Richard must take care of his other debts as well:
Type of Debt Outstanding Principal
|
Credit Card 1
|
$1,000
|
|
Credit Card 2
|
$4,000
|
|
Credit Card 3
|
$1,300
|
|
Credit Card 4
|
$7,130
|
|
Line of Credit
|
$126,000
|
|
Car Loan
|
$41,000
|
|
Mortgage
|
$307,000
|
You have offered to consolidate all of Richard's debts into a single loan with a 10 year term and interest at 6% compounded monthly. Because he would like to continue his spending ways, Richard would like to pay as little as possible and will not accumulate any additional savings during the 10 years beyond what he is saving to meet his children's tuition expenses. Richard would like to make EQUAL payments at the end of each month that will save exactly enough to pay for his children's education and eliminate all of his debts.
a) How much must Richard save each month in the college savings plan?
b) How much must he pay each month towards his debts?
|
Evaluate the effectiveness of the literary form
: What does this article reveal about the power of the personal narrative that is also evident in the works of Ensler and Truth?Evaluate the effectiveness
|
|
What effective annual rate would nellie have earned
: Nellie purchased $1,000,000 of bonds issued by a foreign country ten years ago. The coupon on the bond was 7.5% paid semi-annually.
|
|
How many social media platforms do you have
: Have you ever found yourself in a position that you did not agree with someone cultural beliefs and practices? How did you approach the issue?
|
|
Find the nominal annual rate on credit card
: Find the nominal annual rate on your credit card if the effective annual rate is 19% with monthly compounding.
|
|
How much must he pay each month towards his debts
: a) How much must Richard save each month in the college savings plan? b) How much must he pay each month towards his debts?
|
|
What are the essential to encouraging team empowerment
: What are the essential to encouraging team empowerment, ownership, creativity, and trust.why it might be waning, and showcase ways to change the current state.
|
|
Financial position in the course of the month
: What happened to your financial position in the course of the month (i.e., the value of your stock plus any other investment-related income)?
|
|
What interest rate would a person have to earn
: What discount rate did he apply in deciding to take the lump sum payment? Put differently, what interest rate would a person
|
|
What is the Baldrige Program Framework for Excellence
: What could be learned from the Malcolm Baldrige Award winners, especially as applicable for this Module's learning outcomes, in terms of achieving customer
|