Calculate the Future Cash Outflow , Lump Sum Outflow (when college begins) , and

Question

Calculate the Future Cash Outflow, Lump Sum Outflow (when college begins), and the Required Annual Savings for Jose Degala, 10 years of age. Tuition, currently at $16,000 per year, is expected to increase 5% a per year and that they can earn about 7% return on their investments.

REQUIRED:

(a)

(Round your answer to the nearest whole dollar. Omit the comma and "$" sign in your response.)

(b)

(Round your answer to the nearest 4 decimals. Omit the "%" sign in your response below. For example: 2.3432, 1.2167)

(c)

(Round your answer to the nearest whole dollar. Omit the comma and "$" sign in your response)

(d)

(Round your answer to the nearest whole dollar. Omit the comma and "$" sign in your response)

Child's Name Jose 1. Annual College Cost (Today's Dollar Amount) $ 16,000 Number of periods until student begins college 8 Inflation5 5.00% 2. Cash Outflow Future: $ ??? Number of Periods Child Will Attend College 4 Inflation% 5.00% Education Investment Rate 7.00% Real Rate (inflation-adjusted)% ??? 3. Lump Sum Outflow (when college begins) ??? Number of periods until student begins college 8 Education investment Rate% 7.00% 4. Assets Required Future 0 5. Required Annual Savings $ ???

Explanation / Answer

A. 23639 - PV = 16,000 N=8 I/YR=5 , FV=$23,639

B. 1.905 - (1.07 + 1.05) -1 x 100 = 1.9048%

C. 91938 - PMT=23,639 N=4 I/YR=1.9048, PVAD= $91,938

D. 8961 - FV=91,938 N=8 I/YR=7, PMT=$8,961

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.