How much they have to invest every year to be able to meet

Assignment Help Finance Basics

Reference no: EM13338720

Jeff's parents will like to save for their two year son to go to college. They anticipate that will cost a total of $60,000 for 4 years when Jeff turns 20.
They have spoken to their financial advisor and based on past tends have been informed that it will not be unrealistic to expect a 6% return on their investments in the long run. How much they have to invest every year to be able to meet their goal of a college fund for Jeff.
Apply the following modifications to the decision problem one at a time and solve for each case.
a. Annual college fees are $15000 per year and can be paid every three months
b. College annual fees are expected to grow in line with inflation. Long term inflation forecasts are 2% per annum.
c. Because of other commitments they are only able to put away $1500 per annum for college funds. How much longer will it take to achieve the goal.
d. It turns out that they waited and delayed their decision and now Jeff is 12 . However, they are able to put away 3000 per year instead of the $1000 dollars earlier when he was 2. What will the market return that will ensure that Jeff has the $60,000 he needs to start college.

Reference no: EM13338720

Questions Cloud

An investor be indifferent between these two bonds : 1)Corporate Bonds issued by ABC Corporation currently issued 12.1%. Municipal Bonds of equal risk currently yield 7.7%. At what tax rate would an investor be indifferent between these two bonds?

What are the other energy levels : A certain system emits electromagnetic radiation of wavelengths 'lambda'1=310nm, 'lambda'2=207nm and 'lambda'3=124nm. what are the other energy levels

How quickly is the water accelerating : When you put water in a kitchen blender, it begins to travel in a 3-cm-radius circle at a speed of 1 m/s. How quickly is the water accelerating

What is the acceleration of the three boxes : Three boxes are being accelerated on a horizontal table with a 60-N force applied to box 1 at an angle 35o below the horizontal. What is the acceleration of the three boxes

How much they have to invest every year to be able to meet : Jeff's parents will like to save for their two year son to go to college. They anticipate that will cost a total of $60,000 for 4 years when Jeff turns 20.

What is the average power output of the greyhound : A 64kg human sprinter can accelerate from rest to 10 m/s in 3.0s. What is the average power output of the greyhound

What must be the minimum initial speed of the dart : A 19.00kg lead sphere is hanging from a hook by a thin wire 3.40m long, and is free to swing in a complete circle. What must be the minimum initial speed of the dart

Determine the frequency of the photon : A hydrogen atom initially in the ground state absorbs a photon, which excites it to the n = 12.0 state. Determine the frequency of the photon

How the xml equivalent capabilities were used : Write a short essay to discuss how the XML equivalent capabilities were used in the past in WBIS and what changes are expected in XML in future?

User Account

All Pages