Tom and Mary James just had a baby

Question # 00622376 Posted By: katetutor Updated on: 11/27/2017 08:22 AM Due on: 11/27/2017
Subject Finance Topic Finance Tutorials:
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1.Tom and Mary James just had a baby. They heard that the cost of providing a college education for this baby will be $100,000 in 18 years. Tom normally receives a Christmas bonus of $4,000 every year in the paycheck prior to Christmas. He read that a good stock mutual fund should pay him an average of 10 percent per year. Tom and Mary want to make sure their son has $100,000 for college. Consider each of the following questions:

a. How much must Tom invest in this mutual fund at the end of each year to have $100,000 in 18 years?

2. 2.The city of Glendale borrows $48 million by issuing municipal bonds to help build the Arizona Cardinals football stadium. It plans to set up a sinking fund that will repay the loan at the end of 10 years. Assume a 4 percent interest rate per year. What should the city place into the fund at the end of each year to have $48 million in the account to pay back their bondholders?

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  1. Tutorial # 00621111 Posted By: katetutor Posted on: 11/27/2017 08:23 AM
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