in mind when making decisions when setting their capital structure? Question 3: John and Jessica...
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in mind when making decisions when setting their capital structure? Question 3: John and Jessica are saving for their child's education. Their daughter is currently eight years old and will be entering college 10 years from now (-10). College costs are currently (t = 0) $15,000 a year and are expected to increase at a rate of 5 percnt ayear. They expect their daughter to graduate in four years, and that all annual payments will be due at the beginning of each year (t 10, 11, 12, and 13). Right now (t0), John and Jessica have $5,000 in their college savings account. Starting today, they plan to contribute $3,000 a year at the beginning of each of the next five years (t 5-G,+8,9, and , 213 y- 10). Their investment account is expected to have an anhual return of 12 percent. How large of an annual.payment do they have to make in the subsequent six years (t 6, 7,8, 9, and 10) in order to meet their child's anticipated college costs? (Draw a fime line) 2
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