Question
7. One of your neighbors, Mr. and Mrs. Schekel, ( an elderly couple that always bring cookies when they visit ) has been very interested
7. One of your neighbors, Mr. and Mrs. Schekel, ( an elderly couple that always bring cookies when they visit ) has been very interested in hearing about your experiences at university. They would like to send their granddaughter to your university in 8 years time. You estimate that tuition will be $45,000 the first year , and the tuition will grow at 1.26% annually. They estimate it will take her 5 years to complete her undergraduate and MBA degrees, provided she attends summer school . they would also like to bestow a gift of $15,000 to her upon her graduation from the MBA program. How much must your clients deposit today, assuming an intrest rate of 6% in order to send their granddaughter to your university and provide her with the graduation present ?
Show time line . use uneven cash flow method
8. The schkels also have another granddaughter of whom they are very proud. They are considering offering her the following :
a. $40,000 today or
b. $45,000 towards a house down payment when she marries 2 years from now when her fiance finishes medical school. Assuming an intrest rate of 5% , which offer should the granddaughter accept ?
9. Another neighbor, Mr Ruble, is considering depositing $1,500 at the end of each year for five years in a saving account that pays 3.5% per year . you recommend that he deposit the funds at the beginning of each year. Calculate and demonstrate the change in value that will accrue to Mr.Ruble. Explain why there is a change in value .
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