Assume i=10% Use Factor tables to solve the questions 1. Today (t=0) your daughter is born and you decide to start saving for her education. You figure that you will need to pay for 5 years of undergraduate engineering at $20,000 per year (from t=18 through t=22), and two years for graduate school at $30,000 per year (t=23 and t=24). How much needs to be in her education account at t=18 to fund her education in full? (Choose the closest answer) a) 117,960 b) 118,960 c) 119,960 d) 120,960 2. Using your answer from Q.1, continue: Your parent offers to share the education costs equally with you. Your parent deposits the necessary sum in an account on her birth date (t=0). How much did they deposit? a) 10,698 b) 10,787 c) 10,878 d) 11,021 3. Using your answer from Q.1, continue: You decide to fund your half by equal deposits every year from her birth date to her 18th birthday (from t=0 up to and including t=18 deposits). You expect to have to skip the deposit on her 10th birthday due to extra expenses that year. How much do the annual deposits need to be? a) 1160 b) 1214 c) 1303 d) 1469 4. Suppose instead of the plan in Q#3, that you decide to start your equal-sum deposits on her 5th birthday. You will also plan to continue the equal-sum deposits all the way through to her 24th birthday (so including t=5, including t=10, and including t=24). How much do the annual deposits need to be in this case? a) 1750 b) 1780 c) 1810 d) 1840
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