Question

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 5% annually. The college requires total payment at the start of the year. She now has $9,000 in a college savings account that pays 6% annually. Her father will make six equal annual deposits into her account; the first deposit today and sixth on the day she starts college. How large must each of the six payments be? (Hint: Calculate the cost (inflated at 5%) for each year of college and find the total present value of those costs, discounted at 6%, as of the day she enters college. Then find the compounded value of her initial $9,000 on that same day. The difference between the PV of costs and the amount that would be in the savings account must be made up by the father's deposits, so find the six equal payments that will compound to the required amount.) Do not round intermediate calculations. Round your answer to the nearest dollar.

Answer #1

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 $13,000, but these costs are
expected to increase by 6% annually. The college requires total
payment at the start of the year. She now has $10,000 in a college
savings account...

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 $12,000, but these costs are
expected to increase by 7% annually. The college requires total
payment at the start of the year. She now has $9,500 in a college
savings account...

eBook
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 $19,000, but these costs are
expected to increase by 6% annually. The college requires total
payment at the start of the year. She now has $7,000 in a college
savings...

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 $13,000, 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...

Problem 5-40
Required annuity payments
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 $13,000, but these costs are
expected to increase by 5% annually. The college requires that this
amount be paid at the start of the year....

Problem 5-40
Required annuity payments
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 $13,000, but these costs are
expected to increase by 5% annually. The college requires that this
amount be paid at the start of the year....

Problem 5-40
Required annuity payments
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 $13,000, but these costs are
expected to increase by 5% annually. The college requires that this
amount be paid at the start of the year....

A parent is now planning a savings program to put a daughter
through college. She is 13 and plans to enroll in college in 5
years, and she should graduate 4 years later. Currently, the annual
cost for college is $15,000 and is expected to increase 4% each
year. The college requires that the costs be paid at the start
(hint: beginning) of each year. The child now has $7,500 saved for
college in an account and is expected to...

A parent is now planning a savings program to put a daughter
through college. She is 13 and plans to enroll in college in 5
years, and she should graduate 4 years later. Currently, the annual
cost for college is $15,000 and is expected to increase 4% each
year. The college requires that the costs be paid at the start
(hint: beginning) of each year. The child now has $7,500 saved for
college in an account and is expected to...

he wants to have a secure university education for his
lovely daughter Daisy. His daughter is now 13 years old. She plans
to enroll at the University of Professional Studies, Accra in 5
years, and it should take her 4 years to complete her education.
Currently, the cost per year (for everything – her food, clothing,
tuition, books, transportation, and so forth) is GH¢ 12,000 per
year. This cost is expected to remain constant throughout the
four-year university education. The...

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