Your younger sibling tells your parents that he is off to Ball State in 4 years to get a degree....

Question

Your younger sibling tells your parents that he is off to Ball State in 4 years to get a degree. Your parents have been saving $ 5000 per year for the last 10 years at 5%. TheUni will cost $ 25,000 per year. The parents decide that they need to save more and increase their saving to $ 10,000 per year. The interest rate goes up to 6%.

a.Will your brother have the funds to go to College?

b.You would like your parents to ‘gift’ you $ 10000 per yearfor 5 years. This will enable you to pursue a MBA/Ph. D. Your parents say ‘YES.”

c.Your parents plan to spend $ 510000/year travelling. How many trips can they make?

David · Accepted Answer

Your parents start saving $5000 for 10 years then $10000 for 4 years @6% 
5000 5% 250 5250 
10250 5% 512.5 10762.5 
15762.5 5% 788.125 16550.63 
21550.63 5% 1077.531 22628.16 
27628.16 5% 1381.408 29009.56 
34009.56 5% 1700.478 35710.04 
40710.04 5% 2035.502 42745.54 
47745.54 5% 2387.277 50132.82 
55132.

Your younger sibling tells your parents that he is off to Ball State in 4 years to get a degree. Your parents have been saving $ 5000 per year for the last 10 years at 5%. TheUni will cost $ 25,000...

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