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A couple wants to save for their daughter's college expense. The daughter now is at age 10 years and will enter college at age of
A couple wants to save for their daughter's college expense. The daughter now is at age 10 years and will enter college at age of 18 years. The couple estimates that an amount in terms of today's dollars (dollars at child's age of ten), will be required to support the child's college expenses for four years. Assume that these college payments will be made at the beginning of $20,000 per year each school year. The future general inflation rate is estimated to be 4% per year, and the annual inflation-free interest rate is 5%. What is the equal amount, in actual dollars, the couple must save each year until their daughter goes to college? (Choose the closest answer) a) $16,479 Ob) $15,240 O c) $14,982 d) $13,323 O e) $12,556 QUESTION 3 If you deposit SR 40,000 in a bank account that pays a 6% interest compounded monthly for five years, what would be your economic loss if the general inflation rate is 7% during that period? Hint: the economic loss over five years in this case is the difference between the future value and the future value under inflation only F(fi). O a) -2148.06 b) -1124.87 c) -3742.64 d) -1371.67 O e) -2897.3 QUESTION 4 Mohammed is an engineer and his salary in 2015 was SR 140,000 while his current salary (in 2020) is SR 190,000. If the company's salary policy dictates that a yearly raise in salaries reflect the cost of living increase due to inflation, what is the average inflation rate for the period 2015-2020? (Choose the closest answer) O a) 8.13% b) 7.47% c) 4.32% d) 35.71% e) 6.3% QUESTION 5 make five equal annual withdrawals of SR 25,000 starting from n=1? (Choose How much money should be deposited now in an account that pays 10% interest compounded annually in order the closest answer) a) SR 94,770 b) SR 86,745 OC) SR 77,463 d) SR 80,472 e) SR 120,897 Click Save and Submit to save and submit. Click Save All Answers to save all answers. A couple wants to save for their daughter's college expense. The daughter now is at age 10 years and will enter college at age of 18 years. The couple estimates that an amount in terms of today's dollars (dollars at child's age of ten), will be required to support the child's college expenses for four years. Assume that these college payments will be made at the beginning of $20,000 per year each school year. The future general inflation rate is estimated to be 4% per year, and the annual inflation-free interest rate is 5%. What is the equal amount, in actual dollars, the couple must save each year until their daughter goes to college? (Choose the closest answer) a) $16,479 Ob) $15,240 O c) $14,982 d) $13,323 O e) $12,556 QUESTION 3 If you deposit SR 40,000 in a bank account that pays a 6% interest compounded monthly for five years, what would be your economic loss if the general inflation rate is 7% during that period? Hint: the economic loss over five years in this case is the difference between the future value and the future value under inflation only F(fi). O a) -2148.06 b) -1124.87 c) -3742.64 d) -1371.67 O e) -2897.3 QUESTION 4 Mohammed is an engineer and his salary in 2015 was SR 140,000 while his current salary (in 2020) is SR 190,000. If the company's salary policy dictates that a yearly raise in salaries reflect the cost of living increase due to inflation, what is the average inflation rate for the period 2015-2020? (Choose the closest answer) O a) 8.13% b) 7.47% c) 4.32% d) 35.71% e) 6.3% QUESTION 5 make five equal annual withdrawals of SR 25,000 starting from n=1? (Choose How much money should be deposited now in an account that pays 10% interest compounded annually in order the closest answer) a) SR 94,770 b) SR 86,745 OC) SR 77,463 d) SR 80,472 e) SR 120,897 Click Save and Submit to save and submit. Click Save All Answers to save all answers
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