Question

Suppose you borrow money from your parents for college tuition on January 1, 2015. Your parents require four annual payments of $10,000 each, with the first payment due on January 1, 2019. They are charging you 6% annual interest. What is the cost of the college tuition? A. $27,447 B. $29,094 C. $15,939 D. $40,000

Table solution Please!

Answer #1

This is present value calculation, where the first payment is
made at the end of 4^{th} year. Three other payments are
made in subsequent years.

Year |
Cash flow, CF |
6% factors (F) = 1 / 1.06 ^ year |
CF × F |

1 |
0 |
1/1.06 ^1 = 0.94339 |
0 |

2 |
0 |
1/1.06^2 = 0.88999 |
0 |

3 |
0 |
0.83961 |
0 |

4 |
-10,000 |
0.79209 |
-7920.9 |

5 |
-10,000 |
0.74725 |
-7472.5 |

6 |
-10,000 |
0.70496 |
-7049.6 |

7 |
-10,000 |
0.66505 |
-6650.5 |

Total = -29093.5 |

Note: Since there are payments, all cash flows are in negative signs.

The present value is -29,093.5, which is rounded to -29,094.

The cost of tuition is $29,094.

Answer: B

You
have been accepted into college. The college guarantees that your
tuition will not increase for the four years you attend college.
The first $10,000 tuition payment is due in six months. After that,
the same payment is due every six months until you have made a
total of eight payments. The college offers a bank account that
allows you to withdraw money every six months and has a fixed APR
of 3.9% (with semiannual compounding) guaranteed to remain the...

You are saving for your child’s college education. Tuition will
be $30,000 each year for four years, with the first tuition payment
due 18 years from today. • How much do you need to deposit today in
a bank account that earns 6% annual interest from now through the
end of your child’s college education so that you will have enough
money to meet all the tuition payments?

You have been accepted into college. The college guarantees that
your tuition will not increase for the four years you attend
college. The first $ 10 comma 800 tuition payment is due in six
months. After that, the same payment is due every six months until
you have made a total of eight payments. The college offers a bank
account that allows you to withdraw money every six months and has
a fixed APR of 4.5 % (with semiannual compounding)...

Suppose that you are planning to pay for your child’s college
tuition. Your child was just born, and all-four- years of college
tuition for your child will be due exactly on the child’s 18 th
birthday (i.e. all payments at end of year 17). You think for the
first 8 years you can afford to set aside $4,000 per year (with the
first deposit being made at the end of the first year). How much
will you have to save...

Your friend needs to borrow $26,995 from a credit union to pay
tuition at a local college. The credit union charges a 3.5% nominal
annual rate. The terms of the loan require that your friend make 12
equal end of month payments each year for 4 years and then an
additional final ballon payment of $7,500 at the end. What would
the equal monthly payments be

The parents of a newborn baby would like to put money away today
to cover all of the child’s expected total 4-years of college
tuition. The first tuition payment is due exactly 18 years from
today, and the next three payments are due at the end of years 19,
20 and 21. Suppose that the parents estimate that the cost of
tuition will be $86,000 per year for the first three years, but
that the fourth year’s tuition will be...

You borrow $10,000 on January 1 and agree to pay off the loan
with 10 annual end-of-year payments. Your annual effective interest
rate is 5%. Complete the loan amortization table shown below for
payment number 5 and payment number 6.
Payment number Payment Amount
Principal Interest Loan Balance After Payment
5
6

Assume that you would like to make 6 yearly deposits for your
kid’s college tuition fee starting today. The initial deposit for
today is $10000 dollars and each year the amount increases by
$1000. The interest rate is assumed to be 8% per year.
a) Draw the cash flow diagram (CFD).
b) Assuming that your kind needs the tuition money as a
lump-sum amount, 10 years from now.
Find the total amount of money that will be accumulated in the...

Suppose that you invested $4,000 in a CD on January 1, 2015
maturing in 5 years that pays interest of 3% per year compounded
monthly and credited at the end of each month. You don't withdraw
any money from the CD during its term.
(a) How much money was in the CD account on
February 1, 2015?
(b) How much money was in the CD account on March 1,
2015?
c) How much money will be in the CD account on
January 1,...

Suppose you borrow $10,000 from the bank on January 15, 2018 to
finance your business. The annual interest rate on the
loan is 6%. How much will you record as an interest expense on
January 31, 2018?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 16 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago