) Mr. and Mrs. Lacks want to collect money for college expenses in a bank at 9% interest rate compounded monthly for their new-born daughter Henrietta. Mr. and Mrs Lacks transfer 7% and 5% of their salaries, respectively, to the savings account every month. Henrietta will go to college at her 18. Each year expense for the college is $40 000 for 5 years and the minimum accepted rate of return is 3%. Mr. Lacks expects to get raise once in every 2 years at about 8% of his salary. If monthly salary of Mrs. Lacks is $ 1500, how much money Mr. Lacks should make during the first 2 years to cover the 5-year college expenses? Ps. Raise will be applied in the first month at every second year. Yearly college expenses will be paid at the end of the year.)
) Mr. and Mrs. Lacks want to collect money for college expenses in a bank at 9% interest rate compounded monthly for their new-born daughter Henrietta. Mr. and Mrs Lacks transfer 7% and 5% of their salaries, respectively, to the savings account every month. Henrietta will go to college at her 18. Each year expense for the college is $40 000 for 5 years and the minimum accepted rate of return is 3%. Mr. Lacks expects to get raise once in every 2 years at about 8% of his salary. If monthly salary of Mrs. Lacks is $ 1500, how much money Mr. Lacks should make during the first 2 years to cover the 5-year college expenses? Ps. Raise will be applied in the first month at every second year. Yearly college expenses will be paid at the end of the year.)
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 14P
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Q5
Transcribed Image Text:) Mr. and Mrs. Lacks want to collect money for college expenses in a bank at 9% interest
rate compounded monthly for their new-born daughter Henrietta. Mr. and Mrs Lacks transfer 7% and 5%
of their salaries, respectively, to the savings account every month. Henrietta will go to college at her 18.
Each year expense for the college is $40 000 for 5 years and the minimum accepted rate of return is 3%.
Mr. Lacks expects to get raise once in every 2 years at about 8% of his salary. If monthly salary of Mrs.
Lacks is $ 1500, how much money Mr. Lacks should make during the first 2 years to cover the 5-year
college expenses?
Ps. Raise will be applied in the first month at every second year. Yearly college expenses will be paid at
the end of the year.)
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