Question

Michelle wishes to establish a university fund for her son who is currently 8 years old.

**Required:**

**a.** If her son will need a monthly income of
$900, how much does he need to be in place at the start of his
university life (ie start of first-year) so that the $900 per month
is achievable? Assuming that the interest **over the three
years** while her son is at university is 6%p.a. compounded
monthly and he is paid the $900 **at the start of**
the month for this present value annuity.

**b. **Using your answer from part a,
how much does Michelle need to invest now **as a lump
sum** (present value) for the next 10 years at 5%pa
(compounded annually) so that there are sufficient funds to achieve
the amount from part a.

Answer #1

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Michelle wishes to establish a university fund for her son who
is currently 8 years old.
Required:
a. If her son will need a monthly income of $900, how much does
he need to be in place at the start of his university life (ie
start of first-year) so that the $900 per month is achievable?
Assuming that the interest over the three years while her son is at
university is 6%p.a. compounded monthly and he is paid the $900...

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month is achievable? Assuming that the interest over the
three years while his daughter is at university is 6%p.a.
compounded monthly and she is paid the $700...

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Harvard. You have determined he will need $85,000 per
year for tuition and living expenses. In 15 years, you
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