Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Joe has two children, Sydney age 5 and William age 2, which he wants to provide for their education funding.  Currently, tuition is $10,000 per year and tuition inflation is it 6%.  Joe anticipates earning 10% on his investments and he anticipates the children to start college at age 18 and go to college for 4 years. Joe wants his last savings payment to be made when the oldest child starts college.  How much should Joe save at the end of each year?

Step 1: Determine the NPV at time period zero of cash flows. Recall that this step determines the amount that could be deposited today, to satisfy the education funding need.

Step 2: Determine annual savings needed to meet the education goal. Note: Throughout this step it is significant to determine two criteria:

(1) How long does the client intend to save?

(2) When will the savings payment be made? In this problem, Joe’s oldest child is 5 and he aims to save till she starts college, which is in 13 years. He also indicates that he desires to “save at the end of each year” which indicates that this is an ordinary annuity problem.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91576

Have any Question? 


Related Questions in Basic Finance

Angelo purchased a 7 annual coupon bond one year ago for

Angelo purchased a 7% annual coupon bond one year ago for $987. At the time of purchase, the bond had six years to maturity. Over the past year inflation has been 3.2%. The market required return on this bond today is 8% ...

Explain debt-equity swaps and how they increase activity in

Explain debt-equity swaps and how they increase activity in the secondary loan market? List additional factors that deserve consideration in a foreign project analysis but are not relevant for a purely domestic project.

Go to financeyahoocom and find the dividend per share for

Go to finance.yahoo.com and find the dividend per share for each of the following firms: a. Microsoft b. Apple c. Coca-Cola To find the dividend per share for Microsoft and Coca-Cola, click on the Dow and then Components ...

1 what three rules govern the construction of a grouped

1. What three rules govern the construction of a grouped frequency distribution? 2. What is the difference between a histogram and a bar graph? 3. Distinguish among the median, mode, and mean.

Now consider a second joint of the same material width and

Now consider a second joint of the same material, width and thickness as the joint in problem 4 above but eccentrically loaded. This time, however, the line of action of the external load is 0.563 in. removed from the ce ...

There are 4 primary financial statements used in financial

There are 4 primary financial statements used in financial statement analysis. They are the balance sheet (or statement of financial position), the income statement (or the statement of operations), the statement of chan ...

1 why do researchers care how much variability exists in a

1. Why do researchers care how much variability exists in a set of data? 2. Distinguish between descriptive and inferential statistics. 3. Conceptually, what does the variance tell us about a set of data?

Assume the following year zero capital investment 6m and

Assume the following: Year Zero: Capital Investment = $6M and Increase in NWC = $.5M; Years 1-4: OCF = $4M; Year 4: Recovery of Earlier Increase in NWC and Cash Flow from Salvage = $2.5M. What are the incremental cash fl ...

1 compare the advantages and disadvantages of using

1. Compare the advantages and disadvantages of using interviews versus questionnaires in survey research. 2. Compare a sample and a population. Under what circumstances can a sample be used to draw conclusions about a po ...

Evaluate your classmates online surveysfor exercise 13 you

Evaluate your classmates' online surveys. For Exercise 13, you worked in a group to create a survey for other students in your class. Pair up with another group to evaluate each other's questionnaire. As you're completin ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro