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A father is now planning a savings program to put his daughter through college. She is 13, she plans to enroll at the university in 5 years, and she should graduate in 4 years. Currently, the annual cost (for everything - food, clothing, tuition, books, transportation, and so forth) is $18,000, but these costs are expected to increase by 5% annually. The college requires that this amount be paid at the start of the year. She now has $6,500 in a college savings account that pays 8% annually. Her father will make six equal annual deposits into her account; the first deposit today and sixth on the day she starts college. How large must each of the six payments be? Round your answer to the nearest dollar. [Hint: Calculate the cost (inflated at 5%) for each year of college and find the total present value of those costs, discounted at 8%, as of the day she enters college. Then find the compounded value of her initial $6,500 on that same day. The difference between the PV of costs and the amount that would be in the savings account must be made up by the father's deposits, so find the six equal payments (starting immediately) that will compound to the required amount.]
Assuming 0% taxes. Equipment can be leased at $12,000 per year (first payment at the end of year) for nine years or purchased at a cost of $68,000.
Bellfont Company produces doorstoppers. August production costs are below: Door Stoppers produced 79,000 Direct material (variable) $20,000 Direct labor (variable) 40,000 Supplies (variable) 20,000 Supervision (fixed) 26,400 Depreciation (fixed) 23,2..
At the end of 5th. Year, how much growth will occur an initial deposit of $ 50 assuming the following rates, 3%, 4%, 5%.
Twenty years ago JeffCo Inc. issued thirtyminus−year ?9% annual coupon bonds with a? $1,000 face value each. Since? then, interest rates in general have risen and the yield to maturity on the? firm's bonds is now? 11%. Given this? information, what i..
What is the current value of this stock to Susan if she requires a 20 percent rate of return on stocks of this risk level?
How does higher WACC affect NPV? How does higher WACC affect IRR? If interest rates are high, what type of project do you want to invest in? Draw NPV profile for these 2 projects and calculate the crossover rate. Describe the conflict area on the gra..
Assume returns from holding small-company stocks are normally distributed. What is approximate probability that your money will triple in value in single year
An investment has an installed cost of $518,800. The cash flows over the four-year life of the investment are projected to be $230,850, $247,450, $214,110, and $162,820. At what discount rate is the NPV just equal to zero? If the discount rate is zer..
What is the relationship between the value of the stock and the price to earnings ratio
Your analyzing the stock of a certain company. The most recent dividend paid was $9 dollars per share. The company's discount rate is 7%, and the firm is expected to grow at 4% per year forever. What should be the stock price today?
As the newly appointed Finance manager, your first assignment is to negotiate with your bank on a new loan. You need one year funding for your project. Which one should you prefer?
What is their nominal yield to maturity? Do not round intermediate calculations. What is their nominal yield to call? Do not round intermediate calculations.
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