Question

Assume that you are earning $30,000/year for all your working years if you have just a high school diploma. However, your salary will increase to $60,000 if you obtain a college degree (4 years program). Thetuition costs for college are $6000/year. You graduate from college when you are 22 and you will retire at 65. You can invest money at 6%. Find the net value of the college education.

Answer #1

If I had a high school diploma only, I would work from age 18 to 65 (For 47 years).

Present worth (PW) of my income ($) = 30,000 x P/A(6%, 47) = 30,000 x 15.5890** = 467,670

If I attend college, I would work from age 22 to 65 (For 43 years).

Net PW of my income ($) = PW of salary - PW of tuition costs for 4 years

= 60,000 x P/A(6%, 43) x P/F(6%, 4) - 6,000 x P/A(6%, 4)

= 60,000 x 15.3062** x 0.7921** - 6,000 x 3.4651 = 727,442 - 20,791 = 706,651

Net value of college education ($) = 706,651 - 467,670 = 238,981

**From P/A and P/F Factor tables

You want to invest on the education of your newborn daughter.
You estimate that 5 years of undergraduate engineering will cost
you $20,000 per year (from t=18 through t=22), and two years for
graduate school will cost you $30,000 per year (t=23 and t=24). How
much do you need to deposit yearly with 10% interest rate
compounding yearly next 18 years to cover her education cost?

You have just made a $6,200 contribution to your individual
retirement account. Assume you earn a rate of return of 9.50
percent compounded annually and make no additional contributions.
How much more will your account be worth when you retire in 35
years than it would be if you waited another 10 years before making
this contribution?
Group of answer choices
$88,610.66
$59,143.85
$148,554.52
$72,171.92
Assume the total cost of a college education will be $170,000
when your baby enters...

You have chosen biology as your college major because you would
like to be a medical doctor. However, you find that the probability
of being accepted to medical school is about 14 percent. If you are
accepted to medical school, then your starting salary when you
graduate will be $321,000 per year. However, if you are not
accepted, then you would choose to work in a zoo, where you will
earn $33,000 per year. Without considering the additional years,
you...

. It is your 6th birthday today. You have a trust fund with
$50,000 that is earning 8% per year.
You expect to withdraw $30,000 per year for 7 years starting on
your 22nd birthday for graduate school. How much money will be left
in the trust fund after your last withdrawal (rounded to the
nearest $10)?

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?

John is 29 years old (just had his 29th birthday party) and is
thinking about getting an MBA degree. He is currently making $60000
per year and expects the same for the remainder of his working
years. John is planning to retire when he turns 65. If he decides
to go to a business school, it will take him two years to get the
degree. During these two years, he gives up his income and, in
addition, pays $65000 in...

Over your 40-year working career, you are planning to be
diligent in planning for retirement. You estimate that you will
start working at age 25, retire at 65, and need $100,000/year to
live on in retirement for 25 additional years (until age 90).
8a) Assuming a TVOM of 8%, what do you need to uniformly
annually invest to meet this goal over 40 years?
8b) What about if you wait 20 years and start investment at age
45? How much...

Congratulations (assume you just had a baby)! You expect your
baby to start college 18 years from today. What college would you
like for your baby to attend? Approximately, how much will the four
years of tuition, room, and board cost you for your baby to attend
this school? How much will you need to save every year (starting
today) for you to have this amount in 18 years? Please state your
assumed discount rate. You must apply the time...

Hypothetically, if you just graduated College at age 25 with a
bachelors degree in Business and you had 0$ in school debt, had a
very good credit, no debt what so ever, had 65 thousand dollars
saved in your bank, WHAT WOULD BE YOUR NEXT MOVE FRESH OUT OF
COLLEGE? Lets say you don't enjoy working and want to create or do
something to start making reasonable revenue, or invest in
something to become wealthy or financially comfortable in the...

You have 35 years left until retirement and want to retire with
$2.5 million. Your salary is paid annually, and you will receive
$75,000 at the end of the current year. Your salary will increase
at 2 percent per year, and you can earn a return of 8 percent on
the money you invest.
If you save a constant percentage of your salary, what
percentage of your salary must you save each year? (Do not
round intermediate calculations and...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 8 minutes ago

asked 10 minutes ago

asked 28 minutes ago

asked 31 minutes ago

asked 36 minutes ago

asked 40 minutes ago

asked 41 minutes ago

asked 41 minutes ago

asked 43 minutes ago

asked 50 minutes ago

asked 50 minutes ago

asked 52 minutes ago