ADM 2350 Lecture Notes - Lecture 1: Savings Account

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pearpig174

3 Mar 2016

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A father is planning a savings program to put his daughter through college. She plans to enroll at the university in 5 years, and it should take her 4 years to complete her education. Currently, the cost per year (for everything- food, clothing, tuition, books, transportation, and so forth) is ,000, but a 5 percent inflation rate in these costs is forecasted. The daughter recently received ,000 from her grandfather"s estate; this money, which is invested in a bank account paying 9% interest compounded annually, will be used to help meet the costs of the daughter"s education. The rest of the costs will be met by money the father will deposit in the savings account. He will make equal deposits to the account in each year from now until his daughter starts college. These deposits will also earn 9 % interest. Pv(at beginning of 1st year of college) = 12763 + 13401[pvif 9%, 1] + 14071[pvif 9%, 2] +

Related Questions

A father is now planning a savings program to put his daughterthrough college. she is 13 and she plans to enroll at theuniversity 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 $15,000, but these costsare expected to increase by 5% annually. the college requires thatthis amount be paid at the start of the year. she now has $7,500 ina college savings account that pays 6% annually. her father willmake 6 equal annual deposits into her account, the first deposittoday and the 6th deposit on the day she starts college. How largemust each of the 6 payments be? [Hint: calculate the cost (inflated5%) for each year of college and find the total present value ofthose costs, discounted at 6%, as of the day she enters college.Then find the compounded value of her initial $7,500 on that sameday. The difference between the present value costs and the amountthat would be in the savings account must be made up by the fathersdeposits so find the 6 equal payments (starting immediately)thatwill compound to the required amount]

peachmacaw787

1)The future value of a $1000 investment today at 8 percent annual interest compounded annually for 5 years is?

2) what is the dividend yeild for a stock that currently pays a $4 dividend per year and the most recent stock price was $40?

3) Mr. Jones is ccreating a college investment fund for his daughter. He will put in $750 per year for the next 15 years and expects to earn a 9% annual rate of return. How money will his daughter have when she starts college?

byzantiumwombat576

You will deposit $14,000 today. It will grow for 8 years at 10% interest compounded semiannually. You will then withdraw the funds annually over the next 6 years. The annual interest rate is 8%. Your annual withdrawal will be: Use Appendix A and Appendix D. (Round "PV Factor" and "FV Factor" to 3 decimal places.)

$9,858

$7,866

$4,166

$6,611

Lou Lewis borrows $12,000 to be repaid over 9 years at 8 percent. Repayment of principal in the first year is: Use Appendix D. (Round "PV Factor" to 3 decimal places. Round your intermediate calculations to the nearest dollar value.)

$1,045

$1,921

$961

$1,188

Mr. Blochirt is creating a college investment fund for his daughter. He will put in $6,000 per year for the next 16 years and expects to earn a 11% annual rate of return. How much money will his daughter have when she starts college? Use Appendix C. (Round "FV Factor" to 3 decimal places.)

$235,140

$224,127

235,867

$223,114

PLEASE SHOW ALL WORK!! EVEN SIMPLE CALCULATIONS, THANKS

lilaccrab451

ADM 2350 Lecture Notes - Lecture 1: Savings Account

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