Your son was just born, and you wish to ensure that enough money will be available...

 

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Your son was just born, and you wish to ensure that enough money will be available to pay for his college education at a private college in Riyadh, when he turns 18. You decide to make deposits into an educational fund on each of your son's birthdays, starting with his first birthday until his 18th birthday. Assume that the educational savings account will return a constant 10 percent. You plan to deposit SR10,000 on your son's first birthday, and plan to increase the size of the deposits by 4 percent each year. a) What was the value of your planned future deposits in the day your son was born? [0.5 mark] b) How much will your son have in his account when he turns 18? [0.5 mark] c) If you decided not to increase amount of the deposit every year, but instead deposit SR12,000 every year starting from your son's first birthday until his 18th birthday. Will he have more or less than amount you found in part b? [0.5 mark] Your son was just born, and you wish to ensure that enough money will be available to pay for his college education at a private college in Riyadh, when he turns 18. You decide to make deposits into an educational fund on each of your son's birthdays, starting with his first birthday until his 18th birthday. Assume that the educational savings account will return a constant 10 percent. You plan to deposit SR10,000 on your son's first birthday, and plan to increase the size of the deposits by 4 percent each year. a) What was the value of your planned future deposits in the day your son was born? [0.5 mark] b) How much will your son have in his account when he turns 18? [0.5 mark] c) If you decided not to increase amount of the deposit every year, but instead deposit SR12,000 every year starting from your son's first birthday until his 18th birthday. Will he have more or less than amount you found in part b? [0.5 mark]

Answer rating: 100% (QA)

a The planned future deposits in the day your son was born can be calculated as follows Deposit on the first birthday SR10000 Increase in deposit per ... View the full answer