Question
You want to begin an investment plan to save for your daughters college education. You plan to put money into an investment account, at the
You want to begin an investment plan to save for your daughters college education. You plan to put money into an investment account, at the end of each year, for the next 18 years. You believe that you will need about $75,000 per year, each year, 19 through 22 years from now.
a. Draw a discrete cash flow diagram for this situation.
b. How much would you have to invest each year to pay for college and have a zero balance at the end of year 22? The effective annual interest rate of your investment is 8%.
c. What interest rate would be needed if you could invest only $5000/y?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started