Suppose you were 100% certain that your future child, assumed to be born in 2029, will...

Suppose you were 100% certain that your future child, assumed to be born in 2029, will attend Simmons University for a four-year education when she is 18 years old (enrolling in fall 2047).

The 2020-2021 tuition, room, board, and fees to attend Simmons are $60,180.

Required (Show/explain your computations):

If tuition were to increase at a rate of 3% per year between now and when your daughter enrolls (fall 2047), what will be the estimated tuition, room, board, and fees for your daughter’s first year of college?

Assume that each of the four years of your daughter’s education will cost the same constant amount you computed in part (1). What is the total amount you would have to spend (assuming no scholarships or grants) to pay for the entire 4-year education?

Assume that you can earn 5% on money saved for your daughter’s education. Suppose Simmons University offered you the following deal: Pay $134,000 today, and your daughter’s full 4-year education will be covered when she enrolls. Which is financially more advantageous to you – accepting this offer, or paying the full amount (the amount you computed in part (2)) in fall of 2047?

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Your child was just born and you are planning for his/her college education. Based on your...

Your child was just born and you are planning for his/her college education. Based on your wonderful experience in Managerial Economics you decide to send your child to Binghamton University as well. You anticipate the annual tuition to be $60,000 per year for the four years of college. You plan on making equal deposits on your child’s birthday every year starting today, the day of your child’s birth. No deposits will be made after starting college. The first tuition payment...

Your child was just born and you are planning for his/her college education. Based on your...

Your child was just born and you are planning for his/her college education. Based on your wonderful experience in Advanced Finance you decide to send your child to Binghamton University as well. You anticipate the annual tuition to be $50,000 per year for the four years of college. You plan on making equal deposits on your child’s birthday EVERY OTHER YEAR for the ages one through seventeen inclusive to fund his/her education. Assume the first tuition payment is due in...

Suppose the lifetime of a certain model of car battery is assumed to follow an exponential...

Suppose the lifetime of a certain model of car battery is assumed to follow an exponential distribution with a mean lifetime of 5 years. a. What is the probability that the total lifetime of the 5 batteries will exceed 9.85 years? b. How many car batteries would be needed to be 90% sure that the total lifetime would exceed 25 years? c. For a sample of size n = 5, put into service at the same time 1) What is...

You and your cousin Kristin were born on the same day. Today is your 25th birthday....

You and your cousin Kristin were born on the same day. Today is your 25th birthday. Five years ago (when you turned 20) your aunt started depositing $2,500 into Kristin's account. She did this every year and she just made a sixth deposit. Your aunt will make forty more $2,500 payments until a 46th and final payment is made on Kristin's sixty fifth birthday. Your aunt has had a change of heart and now wants to make an equivalent provision...

A researcher notes that, in a certain country, a disproportionate number of software millionaires were born...

A researcher notes that, in a certain country, a disproportionate number of software millionaires were born around the year 1955. Is this a coincidence, or does birth year matter when gauging whether a software founder will be successful? The researcher investigated this question by analyzing the data shown in the accompanying table. Decade Total_Births_in_Country_(millions) Number_of_Software_Millionaire_Birthdays Number_ of_CEO_Birthdays_(in_a_random_sample_of_70_companies) 1920 28.365 2 3 1930 24.207 1 2 1940 31.406 11 21 1950 40.619 16 33 1960 38.972 9 7 1970 33.787 4...

Richard and Jennifer were married in 2011. They have a five-year-old child and a son born...

Richard and Jennifer were married in 2011. They have a five-year-old child and a son born November 15, 2020. Richard's 67 year-old father lived in a nursing home until his death on May 23, 2019. Richard and Jennifer provided all of his support until his death. Richard earned $43,000 in salary during the year. They also received $2,100 in interest from the credit union. They incurred $17,000 in itemized deductions during the year. Compute Richard and Jennifer's income tax for...

your wonderful parents established a college savings plan for you when you were born. They deposited...

your wonderful parents established a college savings plan for you when you were born. They deposited $50 into the account on the last day of each month. The account has earned 10% compounded monthly. Now you are off to Monash university. What equal amount can they withdraw beginning today (your 18th birthday) and each year for 4 years to spend on your education, assuming that the account now earns 7% annually?

Your grandparents put $1,200 into a saving account for you when you were born 30 years...

Your grandparents put $1,200 into a saving account for you when you were born 30 years ago (on the day you were born). This account has been earning interest at a compound rate of 7%. Fill out the table below. What is its value today? Amount Interest End of year Year Deposited Earned Balance 0 1,200.00 0.00 1,200.00 1 N/A 2 N/A 3 N/A 4 N/A 5 N/A 6 N/A 7 N/A 8 N/A 9 N/A 10 N/A 11 N/A...

Your grandparents put $1,000 into a saving account for you when you were born 25 years...

Your grandparents put $1,000 into a saving account for you when you were born 25 years ago. This account has been earning interest at a compound rate of 8%. Fill out the table below. What is its value today? Amount Interest End of year Year Deposited Earned Balance 0 1,000.00 0.00 1,000.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The amount...

preparing for your (future) child (or grandchild)’s college education. 20 years later from now, your (future)...

preparing for your (future) child (or grandchild)’s college education. 20 years later from now, your (future) child will go to college. Currently, you’re considering two colleges for your (future) child (or grandchild). University 1 University 2 Princeton University University of Notre Dame 1. Please visit the website of each university and find tuition and related information. Use out-of-state tuition information. Make sure that you include accurate information and citation source (20 points). 2. Using the tuition and related information in (1), you...

Subjects