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Natasha_Volkova [10]
3 years ago
11

A father and mother are planning a savings program to put their daughter through college. Their daughter is now 8 years old. She

plans to enroll at the university when she is 18 and it should take her 4 years to complete her education. Currently, the cost per year (for tuition, etc.) is $16,200, but a 2 percent inflation rate in these costs is forecasted. The cost for each year of college will be withdrawn when she turns 18, 19, 20, and 21. The daughter received $13,000 at age 4 and another $2,900 at age 6 from her grandmother; this money, which is invested in an account earning 7.5 percent interest compounded annually, will be used to help meet the costs of the daughter's education. The rest of the costs will be met by money the parents will deposit in the savings account. They will make 4 equal annual deposits to the account, with the first deposit being made today on her 8th birthday and the last one being made on her 11th birthday. These deposits will also earn 7.5 percent interest compounded annually. How large must each deposit (from the parents) be in order to put the daughter through college
Business
1 answer:
Anna71 [15]3 years ago
4 0

Answer:

$4,102.57

Explanation:

we must first calculate the future costs of college:

cost of college year 1 = $16,200 x (1 + 2%)¹⁰ = $19,747.71

cost of college year 2 = $19,747.71 x 1.02 = $20,142.66

cost of college year 3 = $20,142.66 x 1.02 = $20,545.51

cost of college year 4 = $20,545.51 x 1.02 = $20,956.42

in order to determine how much money does the family need to have before college starts we must discount the cost of college by 7.5%:

PV cost of college year 1 = $19,747.71

PV cost of college year 2 = 20,142.66 / 1.075 = $18,737.36

PV cost of college year 3 = $20,545.51  / 1.075² = $17,778.70

PV cost of college year 4 = $20,956.42  / 1.075³ = $16,869.09

total = $73,132.86

the future value of the grandmother's deposits:

$13,000 x (1 + 7.5%)¹⁴ = $35,781.77

$2,900 x (1 + 7.5%)¹² = $6,907.16

total = $42,688.93

that means that you will need to save $73,132.86 - $42,688.93 = $30,443.93 by the time your child turns 18

you will make 4 deposits and their future value will be:

deposit x 1.075¹⁰ = 2.0610D

deposit x 1.075⁹ = 1.9172D

deposit x 1.075⁸ = 1.7835D

deposit x 1.075⁷ = 1.6590D

total = 7.4207D

yearly deposit = $30,443.93 / 7.4207 = $4,102.57

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O D $0

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I hope my answer helps you

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3 years ago
Daniel, age 38, is single and has the following income and expenses in 2020:
Sliva [168]

Answer:

See below

Explanation:

a. Classify the following expenses as either " Deductible for AGI " , " Deductible from AGI " , or " not deductible".

Particulars

•Payment of Alimony ----- Not deductible

•Mortgage interest on residence---Deductible from AGI

•Property tax on residence------Deductible from AGI

•Contribution to traditional IRA (assume the amount is fully Deductible)----Deductible for AGI

Contribution to United Church-------Deductible from AGI

Loss on the sale of real estate(held for investment)-------Deductible for AGI

Medical expenses------deductible from AGI

State income tax-----------deductible from AGI

Federal income tax-------Not deductible

What is Daniel's Gross income and his AGI

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Salary income + net rent income + dividend income

$165,000 + $12,500 + $2,900

$180,400

ii AGI

Gross income - (Contribution to traditional IRA + loss on sale of real estate)

$180,400 - ($4,800 + $575)

$175,025

b. Because Daniel's total itemized deductions (after any limitations) are $14,900 (Please see workings below), he would benefit from itemizing his deductions from AGI

•Workings

Mortgage interest on residence $8,300

Property tax on residence

$3,400

Contribution to United Church

$1,700

State income tax

$1,500

Medical expenses[Medical expenses that are allowed for tax deductions should not be more than 10% Adjusted gross income

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Archie Co. purchased a framing machine for $45,000 on January 1, 2021. The machine is expected to have a four-year life, with a
swat32

Answer:

depreciation for 2021 is $ 18,000

book value at December 31, 2021 is $ 27,000

Explanation:

Sum of Digits Method is a depreciation method that provides for higher depreciation to be charged early in the life of an asset with a lower depreciation in later years.

Sum of digits for the  framing machine is calculated as follows :

Year                                           Sum of Digits

1                                                          4

2                                                         3

3                                                         2

4                                                          1

Total                                                   10

<u>Depreciation for 2021 is calculated as :</u>

= 4/10× $ 45,000

= 18,000

<u>Book value at December 31, 2021 is calculated as :</u>

=Cost - Accumulated Depreciation

=$45,000 - $ 18,000

=$ 27,000

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The CE consists of estimates derived from two separate surveys, the Interview Survey and the Diary Survey. The Quarterly Interview Survey is designed to collect data on large and recurring expenditures that consumers can be expected to recall for a period of 3 months or longer, such as rent and utilities, and the Diary Survey is designed to collect data on small, frequently purchased items, including most food and clothing. Together, the data from the two surveys cover the complete range of consumers’ expenditures. CE data are collected for BLS by the U.S. Census Bureau."

Reference: U.S. Bureau of Labor Statistics. “Consumer Expenditures and Income: Overview.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 2019

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