Question
1.Congratulations!You just welcomed a new child into the world today.You have a plan to pay for 4 years of college for your child when they
1.Congratulations!You just welcomed a new child into the world today.You have a plan to pay for 4 years of college for your child when they reach college age.You opened a savings account today with an initial deposit of $5,000.In 18 years from now,when your child is beginning to attend college,4 years of college will cost $600.000.The bank is giving you an interest rate of 1.75%compounded monthly.How much will you need to deposit each month inthecollegesavingsaccounttohavesavedenoughmoneytocovertheentirecostof4yearsof theircollegetutionby their first day of college?
2.A friend offers to sell you a perpetuity that will pay you $85 per year at an annual interest rate of4.5%for $2,000. Would you accept this deal?Explain why or why not,and indicate any relevant risks.
4.As ShoeGlue Incorporated's financial year 2023 is coming to a close,the company,which is publicly traded and the leading manufacturer of adhesives for footwear,is reviewing their projections for 2024 as well as the amount of dividends they expect to distribute to shareholders in the coming year.Fill-in the missing information in the table below based on the ShoeGlue operations teams'performance notes,and answer questions (a)and (b)below the table. Performance Notes For their financial year 2024, ShoeGlue is forecasting a 7.5% increase in sales with many more people than in past years choosing to repair their footwear rather than buy new footwear. The company expects that its year-end operating costs, including depreciation, will equal 75% of sales in 2024 . ShoeGlue's tax rate and dividend payout ratio are expected to remain the same in 2024. Interest expense will be the same dollar amount in 2024 as in 2023 . a)How much is ShoeGlue expecting to distribute to investors in the form of dividends in 2024 ? b)What is the expected growth rate of ShoeGlue's dividends in 2024 compared to 2023
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