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1. William Jack and Sophia Rose are planning on their first child education. If they expect that college will cost RM150,000 per year in 18 years, calculate how much should the couple begin depositing annually at the end of each of the next 18 years to accumulate enough funds to pay one year of tuition 18 years from now. Assume they can earn a 6% annual rate of return on their investment. 2. Aina just got her driver license, and she wants to buy a new car cost for RM70,000. She has RM3,000 to invest as a lump sum today. Aina is a conservative investor and she only invests in safe products. After approaching different banks, she is offered the following investment opportunities. Union Bank’s savings account with an interest rate 10.8% compounded monthly. First State Bank’s savings account with an interest rate of 11.5% compounded annually 3. Calculate how long it will take Aina to accumulate enough money to buy the car in each of the investment opportunities. Explain which investment opportunity should be taken by Aina.

1. William Jack and Sophia Rose are planning on their first child education. If they expect that college will cost RM150,000 per year in 18 years, calculate how much should the couple begin depositing annually at the end of each of the next 18 years to accumulate enough funds to pay one year of tuition 18 years from now. Assume they can earn a 6% annual rate of return on their investment. 2. Aina just got her driver license, and she wants to buy a new car cost for RM70,000. She has RM3,000 to invest as a lump sum today. Aina is a conservative investor and she only invests in safe products. After approaching different banks, she is offered the following investment opportunities. Union Bank’s savings account with an interest rate 10.8% compounded monthly. First State Bank’s savings account with an interest rate of 11.5% compounded annually 3. Calculate how long it will take Aina to accumulate enough money to buy the car in each of the investment opportunities. Explain which investment opportunity should be taken by Aina.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter13: Investing In Mutual Funds, Etfs, And Real Estate
Section: Chapter Questions
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1. William Jack and Sophia Rose are planning on their first child education. If they expect that college will cost RM150,000 per year in 18 years, calculate how much should the couple begin depositing annually at the end of each of the next 18 years to accumulate enough funds to pay one year of tuition 18 years from now. Assume they can earn a 6% annual rate of return on their investment. 2. Aina just got her driver license, and she wants to buy a new car cost for RM70,000. She has RM3,000 to invest as a lump sum today. Aina is a conservative investor and she only invests in safe products. After approaching different banks, she is offered the following investment opportunities. Union Bank’s savings account with an interest rate 10.8% compounded monthly. First State Bank’s savings account with an interest rate of 11.5% compounded annually 3. Calculate how long it will take Aina to accumulate enough money to buy the car in each of the investment opportunities. Explain which investment opportunity should be taken by Aina.
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