Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 7% annual interest rate, compounded monthly, in order to have $40,000 in the fund at the end of 15 years?

Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 7% annual interest rate, compounded monthly, in order to have $40,000 in the fund at the end of 15 years?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 2DTM

See similar textbooks

Related questions

Q: What lump sum do parents need to deposit in an account earning 10%, compounded monthly, so that it…

A: Two questions appear on the board. They are unrelated and are not sub parts. Hence, only the first…

Q: eremiah Wood wants to set up a fund to pay for his daughter's education. In order to pay her…

A: Amount needed in 4 years (CF1) = $25,000 Amount needed in 5 years (CF2) = $26900 Amount needed in 6…

Q: A newborn child receives a $9,000 gift toward a college education from her grandparents. How much…

A: As per the given information: Principal amount or amount of money deposited (P) - $9,000 Time period…

Q: Soon-to-be proud parents of a new born baby are planning to establish a scholarship fund for their…

A: To calculate the lump sum amount we need to calculate the present value of all the future cash flows…

Q: Rase High School wants to set up a scholarship fund to provide five $3,000 scholarships for the next…

A: Hi, since you have posted multiple questions, I will answer the first one only, as per the…

Q: Harry and Lisa Perry have agreed to pay for their granddaughter's college education and need to know…

A: Given information: Annual interest rate is 4% Annuity payment is $25,000 Number of years is 5

Q: Will and Jane Sparks are establishing a college fund for their 1-year-old daughter, Jennifer. They…

A: The question gives the following information:

Q: . How much should you deposit monthly to accumulate $85,000 in 15 years?

A: Future Value of Annuity: It represents the future worth of current annuity payments made…

Q: Tatsumi invested Php 10,000 now for the college education of his three-year old son. If the fund…

A: Amount invested today (A) = Php 10000 Age of son today = 3 years He needs to withdraw for 4 years (m…

Q: You want to endow a scholarship that will pay $11,000 per year forever, starting one year from now.…

A: Framework:If P is the perpetuity and r is the discount rate, then PV of a perpetuity = P / rAmount…

Q: Brenda expects to receives Sh.50,000 at the end of each year for 5 years in a fund earning 10% per…

A: The present value of an annuity is a series of payments or receipts lasting for some specific…

Q: A father has saved a fund to provide for his son'S 4-year university program. The fund will pay…

A: The time worth of cash draws from the possibility that reasonable financial backers like to get cash…

Q: Chasity and Garrett plan to send their son to university. To pay for this they will contribute 9…

A: Answer: Calculation of the size of the annual contribution required: Step 1: Calculation of the…

Q: A fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The…

A: An annuity is a series of cash flows that involve an equivalent periodic amount over a specific time…

Q: You have an endowment insurance policy that paid you a lump sum of $400,000. If you invest the sum…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: Will and Jane Sparks are establishing a college fund for their 1-year-old daughter, Jennifer. They…

A: As per the given information: Amount = $40,000Annualized rate of return (r) = 8%No. of years (n) =…

Q: Alain Dupre wants to setup a scholarship fund for his school. The annual scholarship payment is to…

A: The equivalent annual deposit is the periodic payment made towards the acquisition of an asset or…

Q: To benefit the ISU College of Business, Bill Vickers would like to establish a “perpetual”…

A: Future Value (FV)= $210,000 per year Time period (n)= 13 years Annual return (i)= 4.1 percent…

Q: New parents wish to save for their newborn's education and wish to have $35,000 at the end of 16…

A: Future value of annuity is the future value of the same cash flows that takes place at the end of…

Q: You want to endow a scholarship that will pay $11,000 per year forever, starting one year from now.…

A: In the given question we require to calculate the amount of donation to receive $11000 per year…

Q: Allain Dupre wants to set up a scholarship fund for his school. The annual scholarship payment is to…

A: Using excel PV function

Q: A fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The…

A: Fund grant for each year = P120,000 for 5 years Grant each quarter = P30,000 for next 5 years Grant…

Q: A fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The…

A: Given information: Principal 1 = P 50,000 Rate = 8% compounded monthly Time = 5 years Principal 2 =…

Q: For her daughter's education, Georgina Harcourt has invested an inheritance in a fund paying 3.8%…

A: Present Value of annuity refers to the value of regular payments of equal amounts at a specified…

Q: ) Gabrielle needs $200,000 in eight years. She has set up a sinking fund that earns 5% compounded…

A: Future Value is $200,000 Time period is 8 years Interest rate compounded monthly is 5% To Find:…

Q: Will and Jane Sparks are establishing a college fund for their 1-year-old daughter, Jennifer. They…

A: Introduction Sinking Fund A sinking fund is an account earning compound interest into which you make…

Q: The Pithybottoms want to make a donation to set up a scholarship trust fund at Hinose College. The…

A: When the cash flow are regular and for an indefinite time period, the cash flow is knows as…

Q: 3. Tatsumi invested Php 10,000 now for the college education of his three-year old son. If the fund…

A: Amount invested (A) = Php 10000 Duration till 18th age = 15 years Let the amount son will get from…

Q: Mr. and Mrs. Megabucks would like to set up a college fund for their grandson. They want him to be…

A: Given: N = 24, FV = 0, PMT = 1750, rate = 2.4%/12 = 0.2

Q: Tom and Sandy have set up a sinking fund in order to have $18,000.00 in 4 years for their child's…

A: Using excel PMT function

Q: What lump sum do parents need to deposit in an account earning 10%, compounded monthly, so that it…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: New parents wish to save for thier newborn's education and wish to have $36,000 at the end of 18…

A: The computation of yearly payment and interest as follows: Working note: Hence, the interest is…

Q: A rather wealthy man decides to arrange for his descendants to be well educated. He wants each child…

A: Computation:

Q: Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they…

A: To calculate the deposit amount we will use the present value formula as follows: Deposit amount =…

Q: Ann and Tom want to establish a fund for their grandson's college education. What lump sum must…

A: PV termed as Present value which is current or the present amount of money which is deposited in…

Q: For her daughter's university education, Carla Hackl has invested an inheritance in fund paying 9.2%…

A: The present value is the present worth of the amount that will be paid or received in the future.

Q: A wealthy man desires to award annual scholarships to deserving ECE students for 5 years. The…

A: Scholarship in year 1 = P 120,000 Scholarship in year 2 and year 3 = P 150,000 Scholarship in year 4…

Q: A father has saved money in a fund to finance his son's 4-year university program. The fund pays out…

A: Quarterly Compounded Rate = 8% Number of compounding periods = 4 Withdrawals or Payouts: 300…

Q: A man invested P50,000 now for the college education of his 2-year old son. If the fund earns 14%…

A: Future value can be calculated using FV (rate, nper, pmt, [Pv], [type]) Rate The interest rate Nper…

Q: Brooke and Collin plan to send their son to university. To pay for this they will contribute 10…

A: The PMTs done at the end of each period are ordinary annuity.

Q: A successful investor has decided to set up a scholarship fund for deserving students at her alma…

A: The annual scholarship to be paid there should be sufficient amount today considering the interest…

Q: Tiffany and Levi plan to send their son to university. To pay for this they will contribute 9 equal…

A: We will first have to find the value of the five annual withdrawals at the beginning of the…

Q: Madison and Colton plan to send their son to university. To pay for this they will contribute 12…

A: Given information: Contribute 12 equal yearly payments APR is 4.9% Withdrawals of $34,000

Q: A grateful alumnus wishes to provide a scholarship of $1,800 per year for 4 years to his alma mater,…

A: Annuity- refers to a series of periodic payments made at equal time intervals. This financial…

Q: A person sets up a sinking fund in order to have P100,000 after 10 years for his children’s college…

A: Future Value Required = 100,000 Time Period = 10 years or 20 semi annual periods Interest Rate =…

Q: James decided to fund a school in Orange County in perpetuity. The first payment will be made three…

A: First payment three years from now is $5,320 Growth rate is 3% Annual Interest rate is 9% To Find:…

Q: A 1,000,000-trust fund was set up and to be used by an 8-year old nephew when he goes to college. In…

Q: A fund is to be donated by a wealthy man to provide annual scholarships to deserving students. The…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Comprehensive The following are three independent situations: 1. K. Herrmann has decided to set up a scholarship fund for students. She is willing to deposit 5,000 in a trust fund at the end of each year for 10 years. She wants the trust fund to then pay annual scholarships at the end of each year for 30 years. 2. Charles Jordy is planning to save for his retirement. He has decided that he can save 3,000 at the end of each year for the next 10 years, 5,000 at the end of each year for Years 11 through 20, and 10,000 at the end of each year for Years 21 through 30. 3. Patricia Karpas has 200,000 in savings on the day she retires. She intends to spend 2,000 per month traveling around the world for the next 2 years, during which time her savings will earn 18%, compounded monthly. For the next 5 years, she intends to spend 6,000 every 6 months, during which time her savings will earn 12%, compounded semiannually. For the rest of her life expectancy of 15 years, she wants an annuity to cover her living costs. During this period, her savings will earn 10% compounded annually. Assume that all payments occur at the end of each period. Required: 1. In Situation 1, how much will the annual scholarships be if the fund can earn 6%? How much at 10%? 2. In Situation 2, (a) How much will Charles have at the end of 30 years if his savings can earn 10%? How much at 6%? (b) If Charles expects to live for 20 years in retirement, how much can he withdraw from his savings at the end of each year if his savings earn 10%? How much at 6%? (c) How much would Charles need to invest today to have the same amount available at the time he retires as calculated in Situation 2(a) at 10%? How much at 6%? 3. In Situation 3, how much will Patricias annuity be?
Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 7% annual interest rate, compounded monthly, in order to have $30,000 in the fund at the end of 15 years?
Ann and Tom want to establish a fund for their grandson's college education. What lump sum must they deposit at a 10% annual interest rate, compounded quarterly, in order to have $50,000 in the fund at the end of 15 years? They should deposit $
Jessie is thinking of establishing a fund for his daughter’s college education. He wants his daughter to be able to withdraw P60,000from the fund on her 18th birthday, again on her 19th birthday, again on her 20th birthday, up to her 23rd birthday. If the fund earns interest at 12% per year compounded annually, how much should Jessie deposit at the end of each year, fromthe time his daughter reaches 5 years old up to her 17th birthday?
The Pithybottoms want to make a donation to set up a scholarship trust fund at Hinose College. The fund is to support payments of $5,000 at the end of every three months in perpetuity. If the fund earns 7.5% compounded quarterly, how much must they donate?