Extra Credit 2 H through O

Extra Credit 2 H through O - annual payments be in the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Extra Credit #2 Answer these 2 questions if your last name begins with H through O 1. Nathan and Stephanie are saving for their daughter's college education. Their daughter, Paige, is now years old and will be entering college years from now ( ). College tuition and expenses at State U. are currently a year and are expected to increase at a rate of a year. They expect Paige to graduate in years (if Paige wants to go to graduate school, she's on her own). Tuition and other costs will be due at the beginning of each school year (at , , , and ). So far, Nathan and Stephanie have built up in the college savings account. Their long-run financial plan is to contribute a year at the beginning of each of the next five years (at , , , , and ). Then they plan to make equal annual contributions at the end of each of the following years ( , , , , , and ). Their investment account is expected to earn . How large must the
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: annual payments be in the subsequent years ( , , , , , and ) to meet their daughter's anticipated college costs? 2. Probl em 2-39. Required annuity payments Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $45000 has today. (The real value of his retirement income will decline annually after he retires.) His retirement income will begin the day he retires, 10 years from today; and he will then receive 24 additional annual payments. Annual inflation is expected to be 3%. He currently has $145000 saved, and he expects to earn 7% annually on his savings. How much must he save during each of the next 10 years (end-of-year deposits) to meet his retirement goal? Round your answer to the nearest cent. _________...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online