Question

In: Finance

A father is saving to put his daughter through college. She is 5 years old, will...

A father is saving to put his daughter through college. She is 5 years old, will enroll in 13 years, and should graduate 4 years after that. Assume all college costs are paid upfront at the beginning of the year annually. Currently, college costs $18,000 per year, but is expected to increase 3% per year. He currently has $10,000 saved and his account earns 8% annually. He plans on making 13 equal deposits starting one year from today. How large must each payment be? Answer with 2 decimals (ex. $1,000.00).

Solutions

Expert Solution

Given one year fee at current rate (P) =$18,000

Growth rate in fee (g)= 3%

First year fees= 18,000*(1+3%)^13 = $26,433.61

Amount required at the commencement of education (13 years from now)= $98,615.76 as follows:

Yearly deposits required at the end of 13 years= $3,322.57 as follows:


Related Solutions

A father is now planing a savings program to put his daughter through college. She is...
A father is now planing a savings program to put his daughter through college. She is 13, plans to enroll at the university in five years, and should graduate four years later. The annual cost is expected to be $15,000 when the daughter starts college, and is expected to remain the same for the four years when the daughter is in college. The college requires the payment at the start of each year. The father will make five equal annual...
A father is now planning a savings program to put his daughter through college. She is...
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 $15,000, but these costs are expected to increase by 6% annually. The college requires that this amount be paid at the start of the year. She now has $10,000 in...
A father is now planning a savings program to put his daughter through college. She is...
A father is now planning a savings program to put his daughter through college. She is 13, plans to enroll at the university in 5 years, and she should graduate 4 years later. Currently, the annual cost (for everything - food, clothing, tuition, books, transportation, and so forth) is $16,000, but these costs are expected to increase by 6% annually. The college requires total payment at the start of the year. She now has $7,500 in a college savings account...
a.Your brother is saving for his daughter (3‐year‐old Monica) to start college in exactly 15 years...
a.Your brother is saving for his daughter (3‐year‐old Monica) to start college in exactly 15 years (t=15) from today (t=0). A single year of college today (t=0) would cost him $25,000. If college costs increase at an annual rate of 3.5%, what will each year of college cost for the four years his daughter is in college (t=15 – age 18, t=16 – age 19, t=17 – age 20, and t=18 – age 21)? b. University offers your brother the...
Babu is saving for his son’s college tuition. His son iscurrently 11 years old and...
Babu is saving for his son’s college tuition. His son is currently 11 years old and will begin college in seven years. Babu has an index fund investment worth $7,500 that is earning 9.5 percent annually. Total expenses at the Black Hills State University, where his son says he plans to go, currently total $15,000 per year, but are expected to grow at roughly 6 percent each year. Babu plans to invest in a mutual fund that will earn 11...
Q1. Babu is saving for his son’s college tuition. His son is currently 11 years old...
Q1. Babu is saving for his son’s college tuition. His son is currently 11 years old and will begin college in seven years. Babu has an index fund investment worth $7,500 that is earning 9.5 percent annually. Total expenses at the Black Hills State University, where his son says he plans to go, currently total $15,000 per year, but are expected to grow at roughly 6 percent each year. Babu plans to invest in a mutual fund that will earn...
Question 63 The PMHNP is working with a father and his teenage daughter. The father has...
Question 63 The PMHNP is working with a father and his teenage daughter. The father has full custody of his daughter as of recently. He reports that the two of them get into arguments all the time over curfew, chores, and the daughter’s lack of responsibility that “she gets from her mother.” The daughter feels like the father never listens to her. Which of the following actions taken by the PMHNP demonstrates unbalancing the relationship? A. Telling the father that...
A 75 year old man was brought into the clinic by his daughter after she noticed...
A 75 year old man was brought into the clinic by his daughter after she noticed that his right eyelid was drooping. She wasn’t sure how long his symptoms had been going on for. During the physical examination, you notice that although his right eyelid was drooping, eye movements were normal. His right pupil appeared to be smaller than the right. 1. What is your differential diagnosis? 2. What part of the nervous system appears to be malfunctioning?
Nancy is 32 years old living with her partner and has a 3 year-old daughter. She...
Nancy is 32 years old living with her partner and has a 3 year-old daughter. She is 16-weeks pregnant with her 2nd child and is having her clinic visit. she is 5'10" weighing 225 lbs. Her obstetrician is concerned about her weight gain (gained 14 lbs in 16 weeks) and advised about her dietary management. He did an A1c test with a result of 6.5%. 1. What are the screening and diagnostic tests for gestational diabetes? 2. What are the...
Phil Frugal has been saving his pennies in penny jars since he was 5 years old....
Phil Frugal has been saving his pennies in penny jars since he was 5 years old. He is now 45 and deposits his savings in a bank, His pennies total $5000. Using this information and your knowledge of the banking system, place the definition and dollar amounts below in their appropriate bins. (Assume a required reserve ratio of 10%.)
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT