How much will you need to deposit each month in the college

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Question 1. Congratulations!You just welcomed a new child into the world today.You have a plan to pay for 4 years of college for your child when they reach college age.You opened a savings account today with an initial deposit of $5,000.In 18 years from now,when your child is beginning to attend college,4 years of college will cost $600.000.The bank is giving you an interest rate of 1.75%compounded monthly. How much will you need to deposit each month in the college savings account to have saved enough money to cover the entire cost of 4 years of their college tution by their first day of college?

Question 2. A friend offers to sell you a perpetuity that will pay you $85 per year at an annual interest rate of4.5%for $2,000. Would you accept this deal? Explain why or why not,and indicate any relevant risks.

Reference no: EM133633399

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