1) You are saving for college education of your 2 children. The difference between their ages is 2; one will start college 15 years from today and other will start 17 years from today. You find out approximately the college expenses of your children to be= $45,000 per year per child, to be paid at the starting of each school year. Annual interest rate is= 7.5 percent. Your deposits start one year from today. You will make your last deposit when your oldest child moves into the college. Suppose 4 years of college.
How much money should you deposit in the account each year to finance education of your children?
2) You wish to purchase your own house, after a lot of searching you discover a appropriate house selling at= $410,000. You don’t have all that money, so you go to bank to safe a mortgage. Your banker gives the offer: Put 20% down payment and bank would charge you 2.5% compounded semi-annually, with 25 year loan maturity. Term 3 years.
After five years of selecting to take offer (end of year), you win lottery and make a decision to give off your credit completely. How much would you be indebted the bank then?
i) $73,105.1
ii) $82,817.4
iii) $137,670.4
iv) $155,960.5
v) None of the provided answers is right.