Question

In: Finance

In order to save money for their daughter's college education, new parents Ashley and John decide...

In order to save money for their daughter's college education, new parents Ashley and John decide to put $325 dollars into a savings account that yields 9.2% interest compounded semi-annually. After making 20 equal payments of $325 they stop making deposits and simply allow the money to grow at the of 9.2% compounded semiannually for 8 more years. How much money will be in the account at the end of this time period?

Solutions

Expert Solution

Calculating Future Value at the end of 10 years,

Using TVM Calculation,

FV = [PV = 0, PMT = 325, N = 20, I = 0.092/2]

FV = $4,191.18

Value at the end of 18 years = 4,191.18(1 + 0.092/2)16

Value at the end of 18 years = $8,606.83

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

2. A couple wants to save money for their child's college education. They deposit their money...
2. A couple wants to save money for their child's college education. They deposit their money in the bank at 6% interest. How many thousand dollars should be deposited in the bank annually from the age of 2 to the age of 17 so that a child from 18 to 21 years old can receive $ 501072 worth of money each year? (Interest will continue to be applied to the money other than the amount withdrawn from the account.)
New parents wish to save for their newborn's education and wish to have $35,000 at the...
New parents wish to save for their newborn's education and wish to have $35,000 at the end of 18 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 5.4% compounded annually? (Round your answers to two decimal places.) How much interest would they earn over the life of the account? Determine the value of the fund after 12 years.
in order to save for your child's college education, you want to save $500 every month...
in order to save for your child's college education, you want to save $500 every month for 20 years, starting one month from now. The monthly interest rate on your savings account is 0.8%. How much money will you have in your account in 20 years?
(TCO 5) Jane’s parents have created a savings account to save for her college education. If...
(TCO 5) Jane’s parents have created a savings account to save for her college education. If they invest $1,000 a year at 6% interest beginning on her first birthday, how much will be in the account when she reaches age 18? (TCO 5) You own a contract that promises an annuity cash flow of $250 year-end cash flows for each of the next 3 years. (Note: The first cash flow is exactly 1 year from today). At an interest rate...
4. New parents wish to save for their newborn's education and wish to have $36,000 at...
4. New parents wish to save for their newborn's education and wish to have $36,000 at the end of 19 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 7.1% compounded annually? (Round your answers to two decimal places.) $   953.27 How much interest would they earn over the life of the account? $   17887.87 Determine the value of the fund after 11 years. $   15126.05 How much interest...
Your new baby was born yesterday. To save for her education, you decide to invest in...
Your new baby was born yesterday. To save for her education, you decide to invest in a 529 plan and will make QUARTERLY contributions until your child enters the great UNLV when she turns 18. That is, you will save for the next 17 years (Or should it be 18 years? Think about it), and the contribution will be made at the END of each quarter. You expect that the 529 plan will return 8.5% per year with quarterly compounding....
Your new baby was born yesterday. To save for her education, you decide to invest in...
Your new baby was born yesterday. To save for her education, you decide to invest in a 529 plan and will make QUARTERLY contributions until your child enters the great UNLV when she turns 18. That is, you will save for the next 17 years (Or should it be 18 years? Think about it), and the contribution will be made at the END of each quarter. You expect that the 529 plan will return 8.5% per year with quarterly compounding....
You want to save money for your newborn niece’s college education. Assume that today’s all-in cost...
You want to save money for your newborn niece’s college education. Assume that today’s all-in cost of attending a prestigious college for four years is $250,000. This number is already discounted back to the beginning of the four years in college, i.e., you need $250,000 in your savings account today to fully fund a college student for the next four years. This all-in cost of college is expected to increase by 5 percent per year forever. You expect your niece...
Fred and Wilma want to save money to provide for their retirement and for the education...
Fred and Wilma want to save money to provide for their retirement and for the education of their daughter Pebbles. Pebbles will need $25,000 annually for four years beginning 15 years from now. Fred and Wilma figure that they will both retire 30 years from now and would like to have $100,000 annually for 25 years (with the first withdrawal beginning one year after their retirement). Given an interest rate of 9%, how much must Fred and Wilma invest annually...
David is entering high school and is determined to save money for college.
  Determining future value David is entering high school and is determined to save money for college. David feels he can save $5,000 each year for the next four years from his part-time job. If David is able to invest at 6%, how much will he have when he starts college?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT