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Megan Berry is a freshman at University of Minnesota. She has some financial questions for the...

  1. Megan Berry is a freshman at University of Minnesota. She has some financial questions for the next three years of school and beyond. (4 pts)
    1. If Megan’s tuition, fees and expenses for books this year total $12,000, what will they be during her senior year (three years from now), assuming costs rise 4% annually? (Use Appendix A or one of the links below) _____________________
      Equation 1.4 Future Value of a Lump Sum
      Present Value $1,000.00
      i = Interest Rate 8.00%
      n = Number of Periods 4
      Future Value $1,360.49
      *For monthly compounding; n = number of months, i = the annual interest rate divided by 12
  1. Megan is applying for a scholarship currently valued at $5,000. If she is awarded it at the end of next year, how much is the scholarship worth in today’s dollars, assuming inflation of 3%. (Use Appendix A or one of the link in part a) __________________
  1. Megan is already looking ahead to graduation and a job and she wants to buy a new car not long after graduation (1-3 years). If after graduation, she begins an investment program of $2400 per year in an investment yielding 6%, what will be the value of the fund after 4 years? (Use Appendix A or one of the links in part a)______________ After 6 years? ____________
  1. Megan’s Aunt Carol told her she would give Megan $1,000 at the end of each year for the next 3 years to help with her expenses. Assuming an interest rate of 2%, what is the present value of that stream of payments? (Use Appendix A or one of the links in part a) __________________

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jeff jeffy answered 1 year ago
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