1. Sam and Sue wants to provide full funding for their 7 year old daughter who is expected to start college when she is 18. The current annual cost of a 4 year college is $38,000 which is expected to increase by 3.5% per year. Sam and Sue expect to earn 4.5% on their investment. Calculate how much they should save by the end of every year in order to accumulate funding for 4 years of college when their daughter turns 18.
$15,653
$15,803
$15,476
$13,385
2. You just purchased some equipment that is classified as 5-year property for MACRS. The equipment cost $138,000. What will the book value of this equipment be at the end of 4 years should you decide to resell the equipment at that point in time? Do not include the $ sign, and round it to a whole dollar. MACRS 5-year property Year Rate 1 20.00% 2 32.00% 3 19.20% 4 11.52% 5 11.52% 6 5.76%