Answered: How much money would you need at the…

How much money would you need at the present to pay for 4 years of college tuition if the first year was anticipated to cost $40,000 and raise by $5000 each year? Assume an interest rate of 8%

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14EB: How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one...

See similar textbooks

Related questions

Q: You receive a 10-year unsubsidized student loan of $33,000 at an annual interest rate of 5.8%. Use…

A: Loan amount = $ 33000 Annual interest rate = 5.8% Period = 4 Years

Q: You want to buy a $23,000 car. You can make a 10% down payment, and will finance the balance with a…

A: Installment is the amount of periodic payments a borrower makes to its lender in order to pay back…

Q: How much must you put away at the end of each year

A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two…

Q: Upstate University charges $15,000 a year in graduate tuition. Tuition rates are growing at 3.5%…

A: Expected graduate tuition in 6 years = Current Charges * (1+growthrate)^no. of years Where, current…

Q: The annual income from a rented house is $35,000. The annual expenses are $5,000. If the house can…

A: Annual Income = $35,000 Annual Expenses=$5,000 Net Cashflow =$35,000 -$5,000 =$45,000 Ending…

Q: You want to have a $40,000 college fund in 6 years. How much will you have to deposit now in an…

A: Using the present value function in excel

Q: You plan to start grad school in 5 years (at the end of year 5) and will graduate 3 years after you…

A: There are two types of basic annuities, i.e., ordinary annuity and annuity due. An ordinary annuity…

Q: Anenterprising student invests 1,000 at an annual interest rate that will grow the original…

A: Initial investment (X) = 1000 The investment doubles every 4 years. Let the interest rate = r

Q: to cost $40,000 and increased by 5% every yea

Q: A student invests $1000 in a bank account that pays an interest rate of 3.25% compounded monthly. a)…

A: given, A=$1000 r=3.25% m=12

Q: After graduating from UCF, you plan to purchase a small condominium for $100,00o. You will be…

A: Purchase Price = 100,000 Down Payment = 10%× Purchase Price = 10%×100,000 = 10,000 Loan Amount =…

Q: You want to buy a car, and a local bank will lend you $10,000. The loan would be fully amortized…

A: "Hi, As you posted multiple questions, we will answer the first question for you as per guidelines.…

Q: How much will you have saved at the end of 6 years? Find the interest.

A: A stream of equal cash flows paid or received periodically is termed as annuity. Annuity is either…

Q: Tony Ring wants to attend Northeast College. He will need $60,000 4 years from today. Assume Tony’s…

A: The present value function or formula can be used to derive the present value of a future sum or…

Q: You would like to save for a car. You would like to have $20,000 saved in 5 years. You decide to…

A: Recurring deposit is an annuity where same amount is deposited with an institution over cardinal…

Q: A couple wants to save for their daughter's college expense. The daughter will enter college eight…

A: Calculation of annual cash flow from savings plan: Answer: A couple must save $13,254.85 each year…

Q: It is likely that plane tickets will increase 6.5% in each of the next three years. The cost of the…

A: The present value of the future money required considering the interest rate and period of the money…

Q: Assume the total cost of a college education will be $365.000 when your child enters college in 18…

A: given, future value = $356,000 present value = $59,000 n = 18 years

Q: Assume the total cost of a college education will be $300,000 when your child enters college in 18…

A: Given: Future value = $300,000 Present value = $60,000 Interest rate = ? Years = 18

Q: You have just completed your bachelor’s degree in business and applied for a job with a local bank.…

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

Q: "Assume you graduate with $31,300 in student loans with an interest rate of 5.25% compounded…

A: The loan amount consists present value of all future payments.It is given that,Loan amount is…

Q: A student needs to borrow $7,000 to pay for college. She can get a loan at an APR of 10% to paid off…

A: We need to calculate total payment by using the loan amortization formula. Fist we need to calculate…

Q: Suppose that you earned a bachelor's degree and now you're teaching high school. The school district…

A: a) The formula to calculate accumulated value of an annuity is given below: Here, i is interest…

Q: You will receive $4000 at graduation 3 years from now. You plan on investing this money at 5 percent…

A: Present Value = $4,000 Interest Rate = 5% Future Value = $50,000 Time Period to achieve

Q: An enterprising student invests $1,000 at an annual interest rate that will grow the original…

A: According to the concept of time value of money, the value of a currency unit is more in today's…

Q: Your parents want to invest a lump sum at 8% interest to finance your masters’ degree which you are…

A: Amount need to be invested now = R 225,397.81 Refer step2 for explanation

Q: An entrepreneurial student plans to borrow money now as much as 20. million, (a) how much is his…

A: Req-(a) Amount Borrowed 20000000.00 Present value of an annuity of $1 at 12% for 10 periods…

Q: he college tuition is expected to increase with an average of 5% per year for the next 5 years. The…

A: We will use the concept of time value of money here. As per the concept of time value of money the…

Q: o complete your last year in business school and then go through law school, you will need $20,000…

A: Calculation of Amount of Deposits and Amount of Deposits after first and last withdrawal: The amount…

Q: To pay for university, you have just taken out a $1000 government loan that makes you pay $126 per…

A: Loan is the value which is borrowed from the other sources like banks and repaid it later with an…

Q: Total expenses for a year at college will be $9,000. You plan to pay $2,600 from your savings and…

A: Total expense is $9,000 Amount paid is $2600 Simple interest rate is 5% To Find: Monthly Payment

Q: You get a student loan of $20,000 with an annual interest rate of 6% where you make a payment once a…

A: The question is based on the concept of Financial Management. Annuity refers to the series of equal…

Q: To pay for university, you have just taken out a $1000 government loan that makes you pay $126 per…

A: Annuity means finite no. of payments which are same in size and made in equal intervals. This…

Q: Assume the total cost of a college education will be $380,000 when your child enters college in 16…

A: Future Value = Present value * (1+rate)^n Where, n = no. of years

Q: Tuition is expected to increase with an average of 5% per year for the next 5 years. The annual cost…

A: Mutual funds are pool of funds invested by the mutual fund companies on behalf of the investors…

Q: *You are planning to purchase your first electric car worth $65,000 right after your graduation (in…

A: A Continuous Compounded Interest rate is the interest rate that is calculated on the principal…

Q: Assume the total cost of a college education will be $365,000 when your child enters college in 18…

A: Value of money declines with the time. Compounding and discounting are two techniques to consider…

Q: Suppose it costs $18,000 per year (in early 2014 dollars) for tuition, room, board, and living…

A: given data cost = $18000 a) inflation average per year = 8% total cost of a four year education…

Q: nger finds herself with an extra $5,000 at the end of the year. Calculate the annual rates of return…

A: A rate of return (ROR) is that the internet gain or loss of an investment over a specified time…

Q: A high school student would like to save P50,000 for his graduation. How much should he deposit in a…

A: The amount required in the future is the future value of periodic deposits. This is the compounded…

Question

How much money would you need at the present to pay for 4 years of college tuition if the first year was anticipated to cost $40,000 and raise by $5000 each year? Assume an interest rate of 8%

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Money Management and Achieving Financial Goals

Learn more about

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

Similar questions

Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one year and the rate is 10%?