(Solved): 1.Congratulations!You just welcomed a new child into the world today.You have a plan to pay for 4 ye ...
1.Congratulations!You just welcomed a new child into the world today.You have a plan to pay for 4 years of college for your child when they reach college age.You opened a savings account today with an initial deposit of $5,000.In 18 years from now,when your child is beginning to attend college,4 years of college will cost $600.000.The bank is giving you an interest rate of 1.75%compounded monthly.How much will you need to deposit each month inthecollegesavingsaccounttohavesavedenoughmoneytocovertheentirecostof4yearsof theircollegetutionby their first day of college?
2.A friend offers to sell you a perpetuity that will pay you $85 per year at an annual interest rate of4.5%for $2,000. Would you accept this deal?Explain why or why not,and indicate any relevant risks.
