Your cousin is currently 13 years old. She will be going to college in 5 years....

 

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Your cousin is currently 13 years old. She will be going to college in 5 years. Your aunt and uncle would like to have $95,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 3.7% per year, how much money do they need to put into the account today to ensure that they will have $95,000 in 5 years Question 8 When Alfred Nobel died, he left the majority of his estate to fund five prizes, each to be awarded annually in perpetuity starting one year after he died. (a) If he wanted the cash award of each of the five prizes to be $48,000 and his estate could earn 11% per year, how much would he need to fund his prizes? (b) If he wanted the value of each prize to grow by 55% per year (perhaps to keep up with inflation), how much would he need to leave? Assume that the first amount was still $48,000. (c) His heirs were surprised by his will and fought it. If they had been able to keep the amount of money you calculated in (b), and had invested it at 11% per year, how much would they have in 2014, 118 years after his death? Your cousin is currently 13 years old. She will be going to college in 5 years. Your aunt and uncle would like to have $95,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 3.7% per year, how much money do they need to put into the account today to ensure that they will have $95,000 in 5 years Question 8 When Alfred Nobel died, he left the majority of his estate to fund five prizes, each to be awarded annually in perpetuity starting one year after he died. (a) If he wanted the cash award of each of the five prizes to be $48,000 and his estate could earn 11% per year, how much would he need to fund his prizes? (b) If he wanted the value of each prize to grow by 55% per year (perhaps to keep up with inflation), how much would he need to leave? Assume that the first amount was still $48,000. (c) His heirs were surprised by his will and fought it. If they had been able to keep the amount of money you calculated in (b), and had invested it at 11% per year, how much would they have in 2014, 118 years after his death?

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SOLUTION Question 7 To calculate how much money your aunt and uncle need to put into the savings account today we can use the formula for the future v... View the full answer