Reference no: EM133059659
1) Bob and Mary want to make a lump-sum investment for their newborn's college education, and their goal is to accumulate $128,000 in 19 years. What is the amount they must invest today to reach their goal if the annual rate of return is 7%?
2) Robert has twins and anticipates a minimum need of $187,000 for college education funds in 16 years when his kids start college. How much money should Robert put in an account today? Assume that the account pays Robert 3.60 percent net after tax compounded annually. Round the answer to two decimal places.
3) You need to accumulate $116,276 for your son's education. You have decided to place equal year-end deposits in a savings account for the next 18 years. The savings account pays 14.12 percent per year, compounded annually. How much will each annual payment be?
4) John's son will start college in 6 years. John estimated a today's value of funds to finance college education of his son as $178,000. Assume that after-tax rate of return that John is able to earn from his investment is 6.48 percent compounded annually. He does not have this required amount now. Instead, he is going to invest equal amounts each year at the beginning of the year until his son starts college. Compute the annual beginning of-the-year payment that is necessary to fund the estimation of college costs. (Please use annual compounding, not simplifying average calculations).
5) Camilla's son starts college in 10 years. She estimates that the current value of college education funds required for her son's education is $55,520. Assume that after-tax annual rate of return that Camilla is able to earn from her investment is 4.86 percent compounded monthly. She is going to invest equal amounts every month at the beginning of the period until her son starts college. Compute the monthly beginning of-the-period payment that is necessary to fund the current value of college education costs. (Please use monthly compounding, not simplifying average calculations).
6) Charles estimated a minimum need of $178,000 for college education fund for his son in 4 years when his son will start college. Assume that after-tax rate of return that Charles is able to earn from his investment is 4.96 percent compounded annually. Charles has already earmarked $15,549 for his son education. He understands that this amount is not enough to finance his son education. He is going to invest additional amounts each year at the beginning of the year until his son starts college. Compute the annual beginning of-the-year payment that is necessary to fund the current deficit. (Please use annual compounding, not simplifying average calculations).
7) Molly's son starts college in 16 years. She estimates the current deficit for her college education funds is $89,486. Assume that after-tax annual rate of return that Molly is able to earn from her investment is 5.76 percent compounded monthly. She is going to invest additional amounts every month at the beginning of the period until her son starts college. Compute the monthly beginning of-the-period payment that is necessary to fund the current deficit.(Please use monthly compounding, not simplifying average calculations).
8) William's son starts college in 10 years. He estimates the current deficit for his college education funds is $95,294. Assume that after-tax rate of return that William is able to earn from his investment is 4.23 percent annually. He is going to invest additional amounts every month at the beginning of the period for 5 years. Compute the monthly beginning of-the-period payment that is necessary to fund the current deficit. (Please use monthly compounding, not simplifying average calculations).
9) Nancy's son plans to start college when he graduates from High School. Assume that after-tax annual rate of return that Nancy is able to earn from her investment is 6.05 percent. The rate of inflation of college costs is 2.09 percent. What is the real inflation-adjusted rate of return of Nancy's investment in college funds?
10) Tony's son, Mark will start college in 9 years. Tuition costs $29,000 today, increasing at an annual rate of 3.1%. Tony wants to earn 11.3% annually on his investments. If he makes an initial investment one year from now, and annual additions at the end of each year until Mark starts college, what is the size of the annual (level) investments he must make to fund 4 years of Mark's college education?
11) Anna's son, Steven will start college in 8 years. Tuition costs $22,000 today, increasing at an annual rate of 7.0%. Anna wants to earn 4.5% annually on her investments. If she makes an initial investment one year from now, and annual additions at the end of each year until Steven starts college, what is the size of the annual (level) investments she must make to fund 4 years of Steven's college education?