Question: It will cost $20,000 a year for four years when an 8-year-old child is ready for college. How much should be invested today if the

It will cost $20,000 a year for four years when an 8-year-old child is ready for college. How much should be invested today if the child will make the first of four annual withdrawals 10 years from today? The expected rate of return is 8%.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To calculate the present value of the future college costswe can use the formula for a geometri... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

1. Joshua Vermier of Sacramento, California, received a raise after his first year on the job to $43,800 from his initial salary of $42,000. What was Joshuas raise stated as a percentage? Inflation...

Everett and Rosemary Sexauer, a married couple, both age 52, have come to meet with you and have several questions about retirement. They tell you that they want to retire at age 60 at 100% WRR....

Katy invests $15,000 at 8% simple interest for 36 years.( Round your answers to the nearest cent.) How much interest is earned over the 36 year period? How much is in the account at the end of the...

Need Help with the following questions: I have attached the document used for this assignment. Thank You. Assume that Michelle is self-employed. What are her retirement plan options? 2. By using the...

Need Help Completing a work project for Estate Planning. I included the attached document the professor provided. List below are the questions that I need assistance with. (Note: I lost my hp 10bII+...

i have need of these 2 questions Answer (13) John and Barbara Roberts are starting to save for their daughters college education. a. Assume that todays date is September 1, 2002. b. College costs are...

CONFIDENTIAL BPA120] BPA10101 Q1 There are three major concerns of macroeconomics which are output growth, unemployment and inflation. Government policy makers would like to have high output growth,...

Questions 1. Assume that Michelle is self-employed. What are her retirement plan options? 2. By using the annuity approach, calculate the capital needed at retirement (age 67) for the Williamses....

Let's say you deposited $180 comma 000 180,000 in a 529 plan(a tax advantaged college savingsplan) hoping to have $430 comma 000 430,000 available 10 10 years later when your first child starts...

All dollar values are REAL unless otherwise specified. 1 ) You have a child that is 6 years old, and would like to start saving up for their college education. You would like to be able to pay $ 2 4...

Pangkor Bhd produces one uniform product. The assembly department encounters wide fluctuation in activity levels from month to month. However, the following department overhead budget depicts...

At t = 0, a stone is dropped from a cliff above a lake; 1.6 seconds later another stone is thrown downward from the same point with an initial speed of 32 m/s. Both stones hit the water at the same...

when reconciling a checking account the outstanding checks should be the reporting balance on the bank statement to get the general ledger or book balance

At December 31, 2013, Hull-Meyers Corp. had the following investments that were purchased during 2013, its first year of operations: No investments were sold during 2013. All securities except...

Keshara has the following net 1231 results for each of the years shown. What would be the nature of the net gains in 2013 and 2014? Tax Year _______Net 1231 Loss __________Net 1231 Gain 2009...

For 2016, Ashley has gross income of $8,350 and a $5,000 long-term capital loss. She claims the standard deduction. Ashley is 35 years old and unmarried with two dependent children. How much of...

a. Prepare a cross tabulation of the data on Industry (rows) and Brand Revenue ($ billions). Use class intervals of 25 starting at 0 for Brand Revenue ($ billions). b. Prepare a frequency...

The Bigco pension plan has invested in dozens of VC funds. The director of the pension plan is preparing his annual report to the Bigco board of directors. Summary information for Bigcos VC portfolio...

Fill in the Blank Question Fill in the blank question. VIF values greater than or equal to 10 are generally considered to show variance inflation

Multiple Choice Questions 1. The percentage of interest (a) Is used to define the dependency link (b) Is used to decide about the inclusion of a company in the consolidation scope (c) Reflects the...

Multiple Choice Question Select the right answer (only one possible answer unless otherwise stated). 1 Which category (ies) of transactions and events is (are) specified in IAS 18 rules guiding the...

Below are excerpts from Notes to consolidated financial statements of four companies reporting movements in provisions. Stora Enso (Finland IFRS Source: Annual report 2011 Production of paper)...

The financial statements of M&S (GBR) are presented in Appendix A. The company's complete annual report, including the notes to the financial statements, is available online. Instructions Refer to...

Maria Rodriquez and Lynette Kingston are discussing accounting for income taxes. They are currently studying a schedule of taxable and deductible amounts that will arise in the future as a result of...

Crosley Ltd. sold an investment on an installment basis. The total gain of 60,000 was reported for financial reporting purposes in the period of sale. The company qualifies to use the...