You would like to save enough to be able to afford a college tuition payment of...

Question

Question

You would like to save enough to be able to afford a college tuition payment of...

You would like to save enough to be able to afford a college tuition payment of $60,000 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 8% per year compounded annually you will achieve your financial goal.

The advice you have recieved is correct.

True or false??

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Future value of an annuity = C[((1+r)^t-1)/r]
where C is the annuity payment that is 5000
r is the interest rate that is .08
t is the year that is 18
Future value of the annuity = 5000*[((1.08)^18-1)/.08]
The future value of the annuity in 18 years is equal to $187251.2.
However, you need $240000 (60000*4) saved up in 18 years
so that you can pay for the college tuition.
The advice you have received is not correct.
FALSE.

Add a comment

Answer 2

Similar Homework Help Questions

You would like to save enough to be able to afford a college tuition payment of...

You would like to save enough to be able to afford a college tuition payment of $60,000 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. The advice you have recieved is correct. True or False??
1. You would like to save enough to be able to afford a college tuition payment...

1. You would like to save enough to be able to afford a college tuition payment of $60,000 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. True Or false 2. Investments in the Stock Market over any two-year period will always have a higher return than 2-year certificates of deposit...
Finance question please help! QUESTION 14 6.6666 You would like to save enough to be able...

Finance question please help! QUESTION 14 6.6666 You would like to save enough to be able to afford a college tuition payment of $60,000 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 8% per year compounded annually you will achieve your financial goal. The advice you have recieved is correct True False QUESTION 15 6.6666 Diversification is the inclusion of different...

Finance question please help ! QUESTION 5 6.66666 po You would like to save enough to...

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...
Finance question, Please help! QUESTION 11 6.66666 poin If you are saving for retirement you should...

Finance question, Please help! QUESTION 11 6.66666 poin If you are saving for retirement you should find that single company like Apple or Alphabet or Spotify and invest all of your funds in that single asset. Portfolio diversification slows down wealth accumulation by exposing your portfolio to losses that offset gains. True False QUESTION 12 6.66666 poin You have made the recommendation to a client to purchase an immediate annuity. This will convert a lump sum investment into periodic payments...
You have no retirement savings upon graduation from college, but you can afford to save $4,800...

You have no retirement savings upon graduation from college, but you can afford to save $4,800 annually at the end of each year until retirement that you plan to take place 43 years from today. If you hope to have $800,000 in savings when you retire, what rate of return must you earn over that time? Goal: Years: Planned annual payment: 800,000 43 4,800.00 Required rate of return;

Problem 3 You just turned 30 and decide that you would like to save up enough...

Problem 3 You just turned 30 and decide that you would like to save up enough money so as to be able to withdraw $75,000 per year for 20 years after you retire at age 65, with the first withdrawal starting on your 66th birthday. How much money will you have to deposit each month into an account earning 8% per year (interest compounded monthly), starting one month from today, to accomplish this goal?
Would like to have enough money saved to receive a growing annun · years, growing at a rate of 4% per year, w...

Would like to have enough money saved to receive a growing annun · years, growing at a rate of 4% per year, with the first payment of san curring exactly one year after retirement. How much would you need to see your retirement fund to achieve this goal? (The interest rate is 124) i B 1 5 % You would like to have enough money saved to receive a growing annuity for 25 years, growing at a rate of 4%...
You would like to accumulate $2,000,000 for retirement. You have determined that you can afford to...

You would like to accumulate $2,000,000 for retirement. You have determined that you can afford to save $30,000 per year toward your retirement goal, and you will be able to earn a return of 9 percent per year on your investments. Required: Assuming that your annual $30,000 deposits are made at the end of each year, how long will it take for you to accumulate the $2,000,000 you desire? (Enter rounded answer as directed, but do not use rounded numbers...

You are a very forward-looking college student with 2 years to go before graduation. You would...

You are a very forward-looking college student with 2 years to go before graduation. You would like to be able to purchase your first home 4 years after graduation (6 years from now) and will need $50,000 for the down payment. You have been a good saver and currently have $15,000 in your savings account (this is from before college and you will not be able to save any more until after graduation). Assume that your salary the first year...

You would like to save enough to be able to afford a college tuition payment of...

Homework Answers