7. One of your neighbors, Mr. and Mrs. Schekel, ( an elderlycouple that always bring cookies when they visit ) has been veryinterested in hearing about your experiences at university. Theywould like to send their granddaughter to your university in 8years’ time. You estimate that tuition will be $45,000 the firstyear , and the tuition will grow at 1.26% annually. They estimateit will take her 5 years to complete her undergraduate and MBAdegrees, provided she attends summer school . they would also liketo bestow a gift of $15,000 to her upon her graduation from the MBAprogram. How much must your clients deposit today, assuming anintrest rate of 6% in order to send their granddaughter to youruniversity and provide her with the graduation present ?
Show time line . use uneven cash flow method
8. The schkels also have another granddaughter of whom they arevery proud. They are considering offering her the following :
a. $40,000 today or
b. $45,000 towards a house down payment when she marries 2 yearsfrom now when her fiance finishes medical school. Assuming anintrest rate of 5% , which offer should the granddaughter accept?
9. Another neighbor, Mr Ruble, is considering depositing $1,500at the end of each year for five years in a saving account thatpays 3.5% per year . you recommend that he deposit the funds at thebeginning of each year. Calculate and demonstrate the change invalue that will accrue to Mr.Ruble. Explain why there is a changein value .
