Question

30. value: 1.00 points Your parents have accumulated a $150,000 nest egg. They have been planning to use this money to pay college costs to be incurred by you and your sister, Courtney. However, Courtney has decided to forgo college and start a nail salon. Your parents are giving Courtney $18,000 to help her get started, and they have decided to take year-end vacations costing $12,000 per year for the next four years. Use 6 percent as the appropriate interest rate throughout this problem. Use Appendix A and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. How much money will your parents have at the end of four years to help you with graduate school, which you will start then? (Round your final answer to 2 decimal places.) Funds available for graduate school b. You plan to work on a master's and perhaps a PhD. If graduate school costs $22,500 per year, approximately how long will you be able to stay in school based on these funds? (Round your final answer to 2 decimal places.) Number of years

Answer 1

a)

amount available at begining = 150000-18000 = 132000

amount availabe after year1 end = 132000 * 1.06 = 139920

amount available after year 2 begining = 139920 -12000 = 127920

amount availabe after year2 end = 127920 * 1.06 = 135595.2

amount available after year 3 begining = 135595.20 -12000 = 123595.2

amount availabe after year3 end = 123595.20 * 1.06 = 131010.912

amount available after year 4 begining = 131010.912 -12000 = 119010.912

amount availabe after year4 end = 119010.912 * 1.06 = 126151.5667

amount available after year 5 begining = 126151.5667 -12000 = 114151.5667

money parents have at the end of four years = $114151.57...........ans

b)

amount at the begining = $114151.57 - 22500 = $91651.57

amount at the begining of next year = (91651.57 * 1.06) - 22500 = 74650.66

amount at the begining of next year = (74650.66 * 1.06) - 22500 = 56629.704

amount at the begining of next year = (56629.704 * 1.06 ) - 22500 = 37527.4863

Amount at the begining of next year = (37527.49×1.06) - 22500 = 17279.14

Amount available at the begining of the next year = (17279.14 × 1.06) = $18315.89

hence,

He will be able to stay for a period of 5 years plus a fraction of 6th year that will be (18315.89/22500), that will be 0.814, so in total 5.81 years in school.

.

.

PLEASE DO GIVE POSITIVE RATING I REALLY NEED IT