EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 5, Problem 37P
Summary Introduction

To determine: Amount saved by person X at the end of next six years.

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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?
A friend of mine has a 22-year old daughter.  He wants to give her a "$1,000,000 gift" for her college graduation present, with the caveat that she cannot have access to the gift for 45 years.  Given that he invests in an asset that will earn 12% APR compounded annually, how much would he need to invest today?
Frank Chang is planning for the day when his child, Laura, will go to college. Laura has just turned eight and plans to enter college on her 18th birthday. She will need £25,000 at the beginning of each year in school. Frank plans to give Laura a Mercedes-Benz as a combination graduation and 22nd birthday present. The Mercedes is expected to cost £55,000. Frank currently has £10,000 saved for Laura. Also, Frank expects to inherit £25,000 nine years from now that will be used for Laura’s education. Frank expects to be able to earn 7 percent after tax on any investments. How much must Frank save at the end of each of the next 10 years in order to provide for Laura’s education and the Mercedes?
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