Question
Melissa plans to attend graduate school to do a Ph.D. in five years from today. She just completed her MBA program and work in her
Melissa plans to attend graduate school to do a Ph.D. in five years from today. She just completed her MBA program and work in her fathers accounting firm for the next five years. She anticipates that she can complete the Ph.D. program in three years and will need $40,000 at the beginning of each year to pay for tuition and other expenses. Besides getting her regular paycheck from her fathers firm, Melissa father promised to deposit a net amount of $20,000 each year into a special investment account for the next five years with the first deposit one year from today and the last deposit will occur five years from today (or the day she starts her Ph.D. program). The interest rate on the investment account is 8%, compounded annually. With Melissa father annual deposit for the next five years, will Melissa have sufficient funds in the investments account the day she starts her Ph.D. program (i.e. at the beginning of Year 5?). Draw a time line to visualize the problem.
A) Yes, she has surplus of $6,001.48 on the day she starts her program | ||
B) Yes, she has surplus of $23,634.70 on the day she starts her program | ||
C) Yes, she has surplus of $14,248.19 on the day she starts her program | ||
D) No, she needs additional $15,153.00 on the day she starts her program | ||
E) No, she has exactly what she needs on the day she starts her program |
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