7. Assume that your parents wanted to have $120,000 saved for college by your 18 th birthday and they started saving on your first birthday. They saved the same amount each year on your birthday and earned 6.5% per year on their investments. a. How much would they have to save each year to reach their goal? b. If they think you will take five years instead of four to graduate and decide to have $160,000 saved just in case, how much would they have to save each year to reach their new goal? a. How much would they have to save each year to reach their goal? To reach the goal of $120,000, the amount they have to save each year is $ (Round to the nearest cent.) b. If they think you will take five years instead of four to graduate and decide to have $160,000 saved just in case, how much would they have to save each year to reach their new goal? To reach the goal of $160,000, the amount they have to save each year is $ . (Round to the nearest cent.) Assume that Social Security promises you $39,000 per year starting when you retire 45 years from today (the first $39,000 will get paid 45 years from now). If your discount rate is 6%, compounded annually, and you plan to live for 14 years after retiring (so that you will receive a total of 15 payments including the first one), what is the value today of Social Security's promise? The value today of Social Security's promise is $ (Round to the nearest cent.) A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and will be $2,000. Each year after that, you will receive a payment on the anniversary of the last payment that is 5% larger than the last payment. This pattern of payments will go on forever. Assume that the interest rate is 16% per year. a. What is today's value of the bequest? b. What is the value of the bequest immediately after the first payment is made? a. What is today's value of the bequest? Today's value of the bequest is $ (Round to the nearest dollar.)