On a child's first birthday, a parent wishes to deposit enough money so that the child can withdraw $5000 per year for five years. If the first withdrawal will be on the child's 18th birthday, how much should the parent deposit? The rate is 5% annually. On a child's first birthday, a parent wishes todeposit enough money so that the child canwithdraw $5000 per year for five years. Ifthe first withdrawal will be on the child's18th birthday, how much should the parentdeposit. The rate is 5% annually.$21,647.38$8994.93$9916.91$9444.68

Present Value of annuity = Annual payments * PVAF(rate, number of years) Present Value = Future…

On a child's first birthday, a parent wishes to deposit enough money so that the child can withdraw $5000 per year for five years. If the first withdrawal will be on the child's 18th birthday, how much should the parent deposit. The rate is 5% annually. $21,647.38 $8994.93 $9916.91 $9444.68

On a child's first birthday, a parent wishes to deposit enough money so that the child can withdraw $5000 per year for five years. If the first withdrawal will be on the child's 18th birthday, how much should the parent deposit. The rate is 5% annually. $21,647.38 $8994.93 $9916.91 $9444.68

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 2DTM

See similar textbooks

Related questions

Q: Engr. Chloe deposits P10,000 in a savings account on the day her child is born. She deposits an…

A: Computation of the amount in the account the day after the 21 birthday:F=P(ern)+Aern-1er-1Here,…

Q: What lump sum do parents need to deposit in an account earning 10%, compounded monthly, so that it…

A: Two questions appear on the board. They are unrelated and are not sub parts. Hence, only the first…

Q: Helen can earn 3% interest in her savings account. Her daughter Roberta is 11 years old today.…

A: The future value of deposit is the value of the current deposits on a future date based on the…

Q: A couple wants to set up a college fund for their child. The fund will give the child $1,000 per…

A: We need to determine the value of the annuity at the present. Given: PMT = 1000 Period of annuity =…

Q: c). If the father decides to deposit a single amount now instead of K300 at the end of each month,…

A: Data given: FV= k 24,500.90 [as computed in (a) ] r=12% p.a. (assumed compounded annually) n= 17-12…

Q: Willie deposits a fixed monthly amount into an annuity account for his child’s college fund. He…

A: Here, to calculate the monthly contribution we have to use the formula of future value of annuity.…

Q: Grandparents plan to open an account on their grandchild's birthday and contribute each month until…

A: a) Answer: Annuity due. Annuities are regular periodic payments made over a specified period. When…

Q: On your child’s 1st birthday, you open an account to fund his college education. You deposit $300 to…

A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two…

Q: A metallurgical engineer decides to set aside money for his newborn daughter's college education. He…

A: Let’s assume the engineer deposits X for one year for 14 years:

Q: Alice needs P 4,000 per year for four years to go to college. Her father invested P 5,000 in 7%…

A: Future value of an amount is calculated as: = Amount * (1+rate)^number of periods

Q: A couple plans to save for their child's college education. What principal must be deposited by the…

A: Given information: Total amount after 18 years is $43,000 Interest rate is 8% compounded quarterly,…

Q: a parent on the day of the child is born wishes to detrmine what lump sum would have to be paid into…

A: An annuity is a contract between you and an insurance company in which you make a lump-sum payment…

Q: Sammi deposits $12000 at the beginning of each 6-month period into a special savings account. This…

A: Annuity due refers to the series of equal payments that are made at the beginning of each period at…

Q: A parent on the day the child is born wishes to determine what lump sum would have to be paid into…

A: To determine the lump sum amount we can use the concept of time value of money and determine the…

Q: Charlotte wishes to accumulate $100,000 in a savings account in 10 years. If she wishes to make a…

A: Present value indicates the current value of a future earning or sum incurred in the future years…

Q: On the day his baby was born, a father decided to establish a savings account for the child’s…

A: Given Information: Present Value = $0 Annual Payments = $5,000 Time = 18 years Rate = 8%

Q: 4. A child has a savings account in which the same amount is deposited every year. The first payment…

A: Given: Future Value =20,000 Number of payments from 0 to 18 years = 19 Interest rate = 2.3% Tax at…

Q: New parents wish to save for their newborn's education and wish to have $45,000 at the end of 16…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Upon the birth of his first child, Dick Jones decided to establish a savings account to partly pay…

A: Future value is the future worth of an investment which is calculated using the method of…

Q: New parents wish to save for their newborn's education and wish to have $35,000 at the end of 16…

A: Future value of annuity is the future value of the same cash flows that takes place at the end of…

Q: Earl E. Bird and Ivana Waite both celebrated their 66th birthday today. Both of them qualify to…

A: "Present Value" is the present-day value of a sum of money expected to be received at a future date…

Q: A father wants to set aside money for his 5-year-old son's future college education. Money can be…

A: Deposit: It is a saving which one earns during his or her earning period and saves the same amount…

Q: A child age 3 is given $20,000. The amount is put into savings account which pays 4% compounded…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: A father wishes to provide P4,000 for his son on his 21st birthday How much should he deposit every…

A: Given P4000 (amount father wishes to give to son) Deposit to be done for 5 months Semi annual…

Q: nim to receive $3000 each month for 5 years, beginning 18 4.2% p invest the money today in an…

A: Here we will use the concept of time value of money to answer the questions.

Q: A couple wants to begin saving money for their daughter's education. $16,000 will be needed on the…

A: The present value of the annuity is the current worth of a series of cash flows at a certain rate of…

Q: Suppose you want to save money for your child's college expenses. You deposit $1,000 at the…

A: Future value of an annuity due is defined as the formula, which used to get calculated the end value…

Q: Grandparents plan to open an account on their grandchild's birthday and contribute each month until…

A: Future value required (FV) = $ 200,000 Interest rate = 5% Monthly interest rate (r) = 5%/12 =…

Q: A mother wants to invests 9,000.00 for her sons future education she invests a portion of the money…

A: Solution:- Interest is the return amount on money invested.

Q: Your daughter will start college one year from today, at which time the first tuition payment of…

A: We need to use present value of annuity formula to calculate the amount that you need today in your…

Q: A couple plans to save for their child's college education. What principal must be deposited by the…

A: Here, we need to calculate the present value which needs to be deposited or kept aside by the couple…

Q: er deposits P15,500 each quarter in a savings bank paying 12.5% compounded quarterly. If she desires…

A: Future value of amount include the amount being deposited and interest being accumulated over the…

Q: Mrs. Santos deposits P5,500 at the end of every six months in a savings account for her daughter's…

A: Deposit = 5500 every 6 months End of month deposits Interest rate = 4% semi annual period N = 21…

Q: As a savings program toward their child’s college education, parents decide to deposit 100 dollars…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: New parents wish to save for their newborn's education and wish to have $47,000 at the end of 19…

A: Given: Future value = $47,000 Years = 19 Interest rate = 4.3%

Q: Elizabeth Brown has $23,000 that she can deposit into a savings account for five years. Bank A…

A: Here, we need to calculate the future value of the amount deposited today at a given interest rate…

Q: A parent on the day the child is born wishes to determine what lump sum would have to be paid an…

A: Time value of money identifies the depreciation in value of money over the period of time by…

Q: Carol

A: The basic compound interest formula A = P(1 + r/n)nt .Priincipal is $1500,t= 25 years,r=3%.

Q: A student plans to deposit P 2,000 in the bank now and another P 5, 000 each year for the next two…

A: Future value of a present value is the value of that amount after taking into account the time value…

Q: Assume the money earns 7% interest, compounded quarterly

A: Interest rate is i=7% compounded quaterly no. of periods in a year n=4 *1=4 Time t = 18 years amount…

Q: A couple plans to save for their child’s college education. What principal must be deposited by the…

A: Savings refers to money put aside for some specific work or for emergency needs. Saving is used to…

Q: A father wishes to provide P4,000 for his son on his 21st birthday. How much should he deposit every…

A: When the deposit is intended to be made every six months, it means that interest rate will be…

Q: 6. When Alice and Mark's first child was one month old, and at the end of every month thereafter,…

A: The equal payment flow which occurs for a finite period and ends after lapse of finite time period…

Q: A couple wishes to establish a college fund at a bank for their five-year-old child. The college…

A: In an approach, here we need to convert any of the cash flow elements in dollars into an actual…

Q: Pedro deposits a sum of money in Metrobank for Juan. He wants Metrobank to send Juan checks of P…

A: Interest rate (r) = 12% per annum compounded bimonthly = 2% per bimonthly period Bimonthly checks to…

Q: How much should a parent deposit every 3 months at 4% interest compounded quarterly to achieve a…

A: Compound interest is referred as the interest which is calculated on principal amount which involves…

Q: Sali would like to send her parents on a cruise for their 25th wedding anniversary. She has priced…

A: Annuity means where regular payment is made at the end of regular period and full amount with…

Q: How much money will be in the account when the child turns 18?

A: Time value of money(TVM) means that the money received in the present days will have more value…

Q: A mother wishes to set up a savings account for her son's education. She plans on investing $750…

A: Future value of ordinary annuity computes the total amount of periodic payments at a certain time…

Question

On a child's first birthday, a parent wishes to
deposit enough money so that the child can
withdraw $5000 per year for five years. If
the first withdrawal will be on the child's
18th birthday, how much should the parent
deposit. The rate is 5% annually.
$21,647.38
$8994.93
$9916.91
$9444.68

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 - Formula

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

When your son is born you want to determine what lump amount would you have to be paid into an account bearing interest of 10%/yr to provide withdrawals of $10,000 on each of your son's 18th, 19th, 20th, and 21st birthday
New parents wish to save for their newborn's education and wish to have $46,000 at the end of 17 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 5.6% compounded annually? (Round your answers to two decimal places.)$ How much interest would they earn over the life of the account?$ Determine the value of the fund after 10 years.$ How much interest was earned during the 10th year?$
Parents wish to have S 100000 available for a child's education. If the child is now 4 years old, how much money must be set aside at 8% compounded semiannually to meet their financial goal when the child is 18? Part 1 The amount that should be set aside is S
New parents wish to save for their newborn's education and wish to have $35,000 at the end of 16 years. How much should the parents place at the end of each year into a savings account that eans an annual rate of 6% compounded annually? (Round your answers to two decimal places.) $ How much interest would they earn over the life of the account? $ Determine the value of the fund after 12 years. %24
New parents wish to save for their newborn's education and wish to have $47,000 at the end of 19 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 4.3% compounded annually? (Round your answers to two decimal places.)$ How much interest would they earn over the life of the account?$
Grandparents plan to open an account on their grandchild's birthday and contribute each month until she goes to college. How much must they contribute at the beginning of each month in an investment that pays 7%, compounded monthly, if they want the balance to be $200,000 at the end of 18 years? (a) State whether the problem relates to an ordinary annuity or an annuity due. ordinary annuity annuity due (b) Solve the problem. (Round your answer to the nearest cent.)
Please provide detailed solution Your grandma wishes to provide P40,000.00 to your youngest brother on his 21st birthday. How much should she deposit every six months in a bank which pays 6% per year interest if the first deposit is made when the grandson is 3 ½ years old?
Grandparents plan to open an account on their grandchild's birthday and contribute each month until she goes to college. How much must they contribute at the beginning of each month in an investment that pays 7%, compounded monthly, if they want the balance to be $170,000 at the end of 18 years? (a) State whether the problem relates to an ordinary annuity or an annuity due. (b) Solve the problem. (Round your answer to the nearest cent.)
A couple plans to save for their child's college education. What principal must be deposited by the parents when their child is born in order to have 39,000$ When the child reaches the age of 18? Assume the money earns 7% interest, compounded quarterly.?round your answer to two decimal places.
Accounting 1:Kaitlyn wants to set up a fund for his son's education such that he could withdraw $2,050.00 at the beginning of every 3 months for the next 2 years. If the fund can earn 2.20% compounded semi-annually, what amount could he deposit today to provide the payment?
6. When Alice and Mark's first child was one month old, and at the end of every month thereafter, they invested S80 in a Registered Education Savings Plan (RESP) that paid 6% per year, compounded monthly. Determine the amount in the RESP on the child's 18th birthday. a. $23 114.70 b. $19 177.92 c. $30 988.26 d. $27 051.48
A couple plans to save their child's college education. What principal must be deposited by the parents when their child is born in order to have 39,000$ when the child reaches the age of 18? Assume the money earns 8%!interest, compounded quarterly. Round answer to two decimal places.