Question: Its time to start saving for college. The current cost of a 4 year degree is $200,000. You expect an annual average inflation rate of

Its time to start saving for college. The current cost of a 4 year degree is $200,000. You expect an annual average inflation rate of 4% over the next 18 years. What will your sons college degree cost you in 18 years and, if you can earn an average of 8% annual interest on your investments.

Required

How much will you need to deposit each year to have enough money to pay for his education? (Round to the nearest dollar).

Step by Step Solution

★★★★★

3.35 Rating (161 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To calculate the future cost of your sons college degree in 18 years we can use the formula Future ... 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. Suppose your personal federal income tax rate is 30%. You are trying to decide which of the following bonds to invest in. Both are BBB rated and therefore equally risky. State of Illinois Bond...

You are an independent financial planner working in Ontario. It is June 2021, you just finished another meeting with Jason and Amanda and, after reviewing all your notes, compiled the following...

An annuity makes ten annual payments of $1000 each starting 3 years from now. What is the present value today if the discount rate is 10% compounded annually? Question 3) You get weekly checks of $50...

1) Bob and Mary want to make a lump-sum investment for their newborn's college education, and their goal is to accumulate $128,000 in 19 years. What is the amount they must invest today to reach...

I need chapters 18, 19, 20, and 21 for the workbook for Personal Finance by Madura!! Please help!!! Personal Finance, Fifth Edition by Jeff Madura BUILDING YOUR OWN FINANCIAL PLAN WORKBOOK INDEX...

*** There is the lecture for following to answer three questions :? PROPOSALS TO RAISE THE AVERAGE U.S. HOUSEHOLD SAVINGS RATE: Before we launch into a discussion about various proposals to raise the...

(Questions from Lecture and Article) - Discussion Board Activity I need to read the following Lecture Note and the ?Wall Street Journal? articles that I uploaded, and writeanswers for theDiscussion...

LONG-LIVED ASSETS Refer to the notes to the financial statements.The first note, "Summary of Significant Accounting Policies," should provide information about the company's depreciation and...

I am short on time and need assignment 6.34 done, before 6 if possible. If someone can help. Problem 6.34 Present Value Tirade Owens, a professional athlete, currently has a contract that will pay...

Enjoy the assignment to collect the primary data from (5-10) families around your neighborhood or relatives (Total number of persons will be around 20) of the following variables: 1. Division/ origin...

You are given the following regression results estimating the demand for widgets based on time series data for the past 40 months. Qt = 2.5 0.3 x Pt + 12 x Mt Where Qt represents the quantity of...

solve the given differential equation 2 5 x ^ 2 y ' ' + 1 1 xy ' + y = 0

What are the types of reports that an auditor can issue for an audit of ICFR? Briefly identify the circumstances justifying each type of report.

Does the difficulty in determining the current value of an asset create a problem in determining the depreciation expense that should be charged for a year?

Corporate debt has been expanding very dramatically in the last three decades. What has been the impact on interest coverage, particularly since 1977?

For many years businesses have struggled with the rising cost of health care. But recently, the increases have slowed due to less inflation in health care prices and employees paying for a larger...

During 20X1, Craig Company had the following transactions: a. Purchased $300,000 of 10-year bonds issued by Makenzie Inc. b. Acquired land valued at $105,000 in exchange for machinery. c. Sold...

Evaluate the line integral of your vector field along your path. Type in your path (C1orC2) and vector field (Fa,Fb,Fc,orFd) below, then enter the value of the line integral rounded to two digits...

In this problem you will generate a graph similar to Figure. The table below shows the standard deviation for various portfolios of stocks listed in Table 6.5. Plot the relationship between the...

Suppose that KF Exports enters into a FRA with Interfirst Bank with a notional principal of $50 million and the following terms: In six months, if LIBOR is above 6%, KF will pay Interfirst according...

Using the information in Table, determine whether the three-month forward rate on euros is fair if the annualized yield for risk-free borrowing over the next three months is 8% in Europe and 5% in...

a. How long will it take monthly payments of $600 to repay a $65,000 loan if the interest rate on the loan is 9.5% compounded semiannually? b. How much will the time to repay the loan be reduced if...

Noreens RRSP is currently worth $125,000. She plans to contribute for 10 more years and then let the plan continue to grow through internal earnings for an additional 5 years. If the RRSP earns 8%...

If $100,000 will purchase a 20-year annuity paying $739 at each months end, what monthly compounded nominal rate and effective rate of interest are earned by the funds?