Question

Finance question please help !

QUESTION 5 6.66666 po You would like to save enough to be able to afford a college tuition payment of $50,000 per year for four years. Your first year of tuition will be in 18 years. You are advised that if you save $5,000 per year and earn 9% per year compounded annually you will achieve your financial goal. Your fund is reduced by each tuition payment but the remainder of the fund will continue to earn interest at 9%. The advice you have recieved is correct. True False QUESTION 6 6.66666 pc Investments in the Stock Market over any two-year period will always have a higher return than 2-year certificates of deposit issued by JP Morgan Chase and insured by the FDIC True False QUESTION7 6.66666 pc An annuity is a contract between an annuitant and an insurance company in which the company promises to make periodic payments to the annuitant, starting immediately or at some future time. The annuitant buys an annuity either with a single payment or a series of payments called premiums True False

Answer 1

5.Required funds after 18 years = 50,000+50,000*PVAF(9%, 3 years)

= $176,564.73

Amount after 18 years on saving $5,000 a year = 5,000*[{(1.09)¹⁸-1}/0.09]

= $206,506.69

True, the advice is correct. Infact the amount will be more than required.

6.FALSE,

Return in Stock Market fluctuates a lot and can never be predicted. It can be more, can be less.

7.TRUE

Annuity is a contract in which equal periodic payments are made