They recently heard about a plan to pre-pay tuition at current rates, that is pay money invested and pay the tuition 7 years from now? How much are they saving in terms with this decision? Don’t Pre-pay; 781 Don’t Pre-pay; 685 Don’t Pre-pay; 970 pre-pay; 781 pre-pay; 685 pre-pay; 970 Question 8 (1 5 points) Juan has \$100,000 to invest and he has narrowed down his decision to two investments. Option A returns 60% annually for 4 years, but the maximum investment he can make is \$10,000. Option B returns 12% annually for 4 years and would require the entire \$100,000.

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Which option produces the best result for Juan and what is the benefit over the lesser option? Assume that the \$90,000 not invested in Option A would be placed in a safe deposit box earning no interest. Option B; 1816 option A; 1816 option S; 19373 option A; 9532 option A; 19373 option a; 9532 Question 9 (1 5 points) Jessica is in the market for a new car. She has narrowed her search down to 2 models. Model A costs \$20,000 and Model B costs \$18,000. With both cars she plans to pay cash and own them for 5 years before trading in for a new car.

Her research indicates that the trade in value for Model A after 5 years is 50% of the initial purchase price. The trade in value for Model B is 25%. Jessica has no emotional attachment to either model and wants to make a strictly financial decision. The interest rate is 6%. For simplicity assume that operating and maintenance costs for the models are identical every year. Which model is the better decision and how much “cheaper” is it than the alternative? Model B; 2365 Model A; 2000 Model A; 2365 Model a; 2110 Model a; 2000 Model A; 2110

Question 10 (1 5 points) College tuition has been rising at a rate of 7% per year. Currently the average tuition of a state college is \$9,500/year. Andresen’s son Tremor will begin college in 12 years. Andresen’s portfolio is making 5% annually. How much does Andrea need to have set aside today/now to pay for 4 years of college for Tremor? (Note:Tuition will continue to change annually and Andresen’s portfolio balance will continue to accrue interest while Tremor is in school. Also, tuition is due at the beginning of each year. ) 87432 58905 49035