Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Q4.You are 20 years old and have completed your BBA and want to pursue further education but you don't want to take money from your

Q4.You are 20 years old and have completed your BBA and want to pursue further education but you don't want to take money from your father. Your plan is to start working and earn enough money so that you can finance your degree on your own and get yourself enrolled in five years' time. You estimate that the annual cost of doing an MBA 5 years from today will be PKR 400,000 and the program will be two years long. You will need the money at the beginning your program so that you are not worried about how to clear your dues during your studies. Luckily you go for a job interview and they hire you and you start working at a salary of PKR 25,000. So you decide that 50% you will deposit in a saving account at a 10% rate with monthly compounding for your further studies and the remaining amount you will use for your daily expenses.

1.Will you be able to meet your goal at this current saving rate?

2.What percentage of your salary should you save if you want to have exactly your university expenses amount?

3.How would your answer to part 1 change if the saving account rate changed to 5%?Comment on your answer

4.If you are given an option to invest at the 10% saving rate with monthly compounding or 10.5% semiannual compounding, which would you chose? Explain your answer.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes, Arshad Ahmad, Jordan Fortino

6th Canadian edition

1259453146, 978-1259453144

More Books

Students also viewed these Finance questions