Assume the total cost of a college education will be $300,000 when your child enters college in 18 years. You presently have $63,000 to invest.

1.a What annual rate of interest must you earn on your investment to cover the cost of your childs college education? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

1.b

Suppose you are committed to owning a $208,000 Ferrari. If you believe your mutual fund can achieve an annual rate of return of 12 percent and you want to buy the car in 9 years on the day you turn 30, how much must you invest today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

1.c

Imprudential, Inc., has an unfunded pension liability of $568 million that must be paid in 15 years. To assess the value of the firms stock, financial analysts want to discount this liability back to the present.

If the relevant discount rate is 6.1 percent, what is the present value of this liability? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89)