![chrisandthemike76](/avatars/38722.jpg)
chrisandthemike76
16.04.2020 •
Business
Joe and Sarah Fabozzi are saving for the college education of their 1 year old daughter, Beth. The Fabozzi's estimate that college expenses will run $35,000 pear year when their daughter reaches college in 17 years. In other words, the first withdrawal will be made on Beth's 18th Birthday and the last payment will be made on Beth's 17th Birthday. The expected interest rate while saving and in college is 6%. Assume today is Beth's first birthday and the first deposit will be made one year from today. Calculate the annual payment the Fabozzi's must make to the account so that their daughter will be completely supported through four years of college. (Enter a positive value and round to 2 decimals)
Solved
Show answers
More tips
- F Food and Cooking How to Choose the Right Olive Oil: A Comprehensive Guide...
- P Philosophy Is Everything We Strive for Eventually Achieved and Destroyed?...
- S Society and Politics Understanding Politics and Its Role in the Development of Civilization...
- P Philosophy Why Did God Create Man and Place Him in Obscurity?...
- S Society and Politics Skoptsy: Who They Are and How They Perform Castration?...
- O Other Childhood Fears: What Many of Us Experienced...
- P Philosophy What is Something for you?...
- H Health and Medicine Why Do Humans Have One Heart?...
- P Philosophy Unbelievable stories of encounters with otherworldly forces...
- O Other How to Accidentally Get a Rare Coin with Your Change and How to Know Its Value?...
Answers on questions: Business
- B Business Southland Company is preparing a cash budget for August. The company has $17,500 cash at the beginning of August and anticipates $121,800 in cash receipts and $135,500 in...
- B Business Atoll bridge charges $1.00 for passenger cars and $2.50 for other vehicles. suppose that during daytime hours, 65% of all vehicles are passenger cars. if 20 vehicles cross...
- B Business Assume that a grower of flower bulbs sells its annual output of bulbs to an internet retailer for $70,000. the retailer, in turn, brings in $120,000 from selling the bulbs...
- B Business What is the future value of $1,680 in 15 years assuming an interest rate of 8.25 percent compounded semiannually?...
- B Business One characteristic of good business writing is that it:...
- B Business Word can reverse the actions that you do. the undo list in word 2007, 2010, or 2013 can contain ....
- B Business Why should a pencil never be used as a tool when working inside a computer?...
- H Health Which of the following is NOT a purpose of applying wax to the hand of client? A. helping make skin suppleB. prevent skin from dryingC. helping make skin softD. avoid hand...
- M Mathematics Maria invests a total of $16500 in two accounts. The first account earned a rate of return of 10% (after a year). However, the second account suffered a 3% loss in the same...
- H History What is the government doing about the wildfires such as policies and practices...
Ответ:
$4724
Explanation:
Involves 2 steps
In the first step we calculate the total value of savings as on her 18th birthday. This can be done using the Present Value (PV) function in Excel or any financial calculator.
Manually also it can be done by using the PVIFA table & looking up the factor for 6% interest rate column & 4 years row. The factor is 3.465. Then multiply the factor with 35,000 to get the same (approx.) result as above.
i.e. PV= PVIFA(4 years, 6%) * 35,000
The Excel screenshot is shown in attached file along with the formula:
In the next part, we treat this value as the future value of the annual savings of the parents. Note that they will start the savings from the next year, i.e. Beth's 2nd birthday & last payment will be on 17th birthday. So there will be 16 annual payments.
The calculation for the required annual savings in Excel is shown in the attached file (On a financial calculator also you can use the same PMT function with given inputs):
So they must save $4,724.07 annually for this purpose
Ответ:
receipts of cash from David Levin's
Explanation: