C70mt_fall2010_Assig1_Summer2011.docx

C70mt_fall2010_Assig - UNIVERSITY OF TORONTO at Scarborough MANAGEMENT MGTC70H(Personal Financial Management Midterm Exam Date Assignment 1 Due

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UNIVERSITY OF TORONTO at Scarborough MANAGEMENT MGTC70H (Personal Financial Management) Midterm Exam Date: October 27, 2010 Assignment 1 Due Date: Thursday June 16, 2011 by 5 pm Prof. Syed W. Ahmed STUDENT’S NAME:________________________________________________ Last First Middle STUDENT’S I.D. NO.:_______________________________________________ QUESTION NO. MAX. MARKS MARKS OBTAINED 1 25 __________________ 2 15 __________________ 3 30 __________________ 4 30 __________________ TOTAL MARKS 100 __________________ QUESTION 1: Dad Careman would like to assist his two children buy their first house. Sandra 25 will buy the house 3 years from now and Sandy 20 years will buy 8 years from now. To each child Dad will gift 20% of the purchase price of an average house on the day of house purchase. Currently an average house costs $400,000 and house prices are rising at 5% per year. Dad has $70,000 in savings now, which he allocates to an account for Sandra, since she will buy the house first. Dad earns 6% on the savings before taxes, and his marginal tax rate is 40%. a. How much will he needs to save each year to assist Sandra in her home purchase? Assume annuity due. b. How much will he needs to save each year to assist Sandy in his home purchase? Assume annuity due. c.
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This note was uploaded on 07/20/2011 for the course MGMT 70 taught by Professor Ahmed during the Spring '11 term at University of Toronto- Toronto.

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C70mt_fall2010_Assig - UNIVERSITY OF TORONTO at Scarborough MANAGEMENT MGTC70H(Personal Financial Management Midterm Exam Date Assignment 1 Due

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