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FIN - Suppose that you parents started to save for your college education

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Question;Suppose that you parents started to save for your college;education when you turned 10. Their annual contribution to the fund was;$10,000. You graduated from high school at the age of 18. During the 8 year;period, the return on your college fund was 6% on average.;(a) Suppose that two years before you graduated from high;school, financial crisis broke out, which lowered the return on your collage;fund to 1% on average for those two years. How much more must your parents;contribute towards your college fund so that you will end up with the same;amount of money as in part a). Assume that the contribution for the last two;years are the same.;(b) Assume that for the next 4 years while you are in;college, you have locked-in tuition of $12,000 plus $10,000 of living expenses.;Any money you didn?t withdraw from your college fund is invested in the US government;bond and earns interest of 2.5% on average. Do you have enough money to pay for;your college education?

 

Paper#48929 | Written in 18-Jul-2015

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