You are saving for the college education of your two children. They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $40,000 per year per child, payable at the beginning of each school year. The appropriate interest rate is 7 percent. Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college for each child. How much money must you deposit in an account each year to fund your children’s education?
Answers
Answer:
It will deposit $ 10,082.68 per yearto fund their children tuiton
Explanation:
We calculate the present value of the tuiton:
We must notice payment are made atthe beginning of the year. So this will be an annuity-due
C 40,000 per year
time 4 year
rate 7% = 7/100 = 0.07
PV $144,972.6418
we round to 144,972.64
Then, we have two children and we stop the payment when the oldest children goes into college.
so one tuiton must be carryied two years into the future:
Principal $144,972.64
time 2 years
rate 0.07000
Amount 165,979.18
We add both to get the total value of our fund:
144,972.64 + 165,979.18 = 310,951.82 = 310,952
Finally we calculate the couta of this annuity for 17 years
PV $310,952.00
time 17 years
rate 7% = 0.07
C $ 10,082.68
Based o the fact that there are two children involved and the annual savings have to be uniform, the annual amount to fund your children's education will be $10,808.
How much should you deposit yearly?
The amount needed for both children is:
= 2 students x ( College expenses x Present value factor for Annuity due, 7%, 4 years)
= 2 x (40,000 x 3.6243)
= $271,597
This is the total amount to be saved so the amount to be saved yearly is:
271,597 = Amount x ( ( 1 + 7%)¹⁵ - 1) / 7%
Amount = 271,597 / 25.1290
= $10,808
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Related Questions
Which of the following generally provides the least evidence regarding the valuation of accounts receivable?A. Reviewing an aging of accounts receivable.B. Examination of cash receipts subsequent to the balance sheet date.C. Confirming current (0-30 day) year-end accounts receivable.D. Reviewing credit files for selected account.
If Wild Widgets, Inc., were an all-equity company, it would have a beta of .95. The company has a target debt-equity ratio of .40. The expected return on the market portfolio is 11 percent and Treasury bills currently yield 3.5 percent. The company has one bond issue outstanding that matures in 15 years and has a coupon rate of 6.5 percent. The bond currently sells for $1,080. The corporate tax rate is 21 percent.Required:a. What is the company's cost of debt? b. What is the company's cost of equity?c. What is the company's weighted average cost of capital?
Blitz Industries has a debt-equity ratio of .6. Its WACC is 9.1 percent, and its cost of debt is 6.4 percent. The corporate tax rate is 22 percent. a. What is the company's cost of equity capital? b. What is the company's unlevered cost of equity capital? c-1. What would the cost of equity be if the debt-equity ratio were 2?c-2. What would the cost of equity be if the debt-equity ratio were 1.0?c-3. What would the cost of equity be if the debt-equity ratio were zero?
Jayhawk had previously purchased merchandise for $40,000 The company returned $4,000 of the merchandise previously purchased because it was damaged. . The journal entry that Jayhawk would make for the return of the merchandise will include a:
Answers
Answer:
Borrowed Amount = $330,000
Interest Rate = 12%
Interest Expense = Borrowed amount * Interest Rate
Interest Expense = $330,000 * 12%
Interest Expense = $39,600
b. Income is transferred from consumers in the importing nation to domestic producers
c. Income is transferred from consumers in the importing nation to their government
d. All of the above
e. None of the above
Answers
Answer:
Explanation:
An import restriction as the term implies is done to limit the amount of a certain good that is imported into the country. Usually this is done to protect the domestic producers of the good in question who are not be as efficient as the country being imported from and so charge higher prices.
The people in the economy will experience a net loss in welfare because they will now be paying higher prices and as well will be transferring some of their income to their government because import restrictions like tariffs will see their costs passed on to the consumer.
b. Calculate Jia's benefits associated with going out to dinner with her friend.
Answers
Answer:
a. Jia's cost associated with going out to dinner with her friend
= $58
b. Jia's benefit associated with going out to dinner with her friend
= $47
Explanation:
a) Data and Calculations:
Expected cost of meal = $40
Tips (20%) 8
Transport to & from = 10
Total cost of going out = $58
Benefits with going out:
Value of restaurant meal = $25
Amount Jia is willing to pay = $30
Less of eating at home ($8)
Total benefits with going out $47
Jia's cost associated with going out to dinner is $58 and her benefits are $55.
To calculate Jia's cost associated with going out to dinner with her friend, we need to add up the cost of the meal, the tip, and the Uber rides. The meal cost is $40, the tip is 20% of the meal cost (0.2 * 40 = $8), and the Uber rides cost $5 each way, so the total cost is $40 + $8 + $5 + $5 = $58.
To calculate Jia's benefits associated with going out to dinner with her friend, we need to consider the value of the restaurant meal and the enjoyment she gets from spending time with her friend. The value of the meal is $25, and Jia is willing to pay $30 just to spend time with her friend, so the total benefits are $25 + $30 = $55.
Learn more about Cost and Benefits here:
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Answers
Answer:
The correct option is D
Explanation:
Variable cost is the corporate cost or an expense which varies in proportion or relation to the production output. Increase or decrease in the variable cost grounded on the production volume of the company or firm, which in short means that increase or rise in variable cost and the production increases and fall in variable cost, production decreases.
Therefore, the cost which changes or varies in the proportion to change in the volume of the activity is known or referred as variable cost.
Answers
Answer:
The present value of the total amount that Brooke needs to have saved at the beginning of her son's first year of college is 31.959,13
Explanation:
Tuition Fees after inflation at
Year 18 = 15000* ( 1+6.5%)18 = 46599.8157
Year 19 = 15000* ( 1+6.5%)19 = 49628.8037
Year 20 = 15000* ( 1+6.5%)20 = 52854.6759
Year 21 = 15000* ( 1+6.5%)21 = 56290.2299
Since discount rate = 10%
So discount factor = 1+r = 1+10% = 1.1
Since fees are paid at beginning of period hence
Present Value of Fees = Fees (year 18)/1.1^18 +Fees at Year 19/1.1^19 +Fees at Year 20/1.1^20 + Fees at year 21/1.1^21 = 46599.8157/1.1^18 + 49628.8037/1.1^19 + 52854.6759/1,1^20 + 56290.2299^21 = 31959.13
Answers
Answer:
A lot of information is missing, so I looked for similar questions:
- 1,064 yd of fencing is available
since 1,064 is the perimeter and we have a rectangle, we can write the perimeter equation as: 2L + 2W = 1,064
area = L · W
2W = 1,064 - 2L
W = 532 - L
now we replace in the area equation:
area = (532 - L) · L = -W² + 532W (quadratic equation format)
the value of L as our X coordinate:
L = 532 / 2 = 266
W = 532 - 266 = 266
area = -(266)² + (532 x 266) = -70,756 + 141,512 = 70,756 sq yards
or
area = 266 · 266 = 70,756 sq yards
When you have a rectangle, the largest possible area is a square, where both sides have the same length.