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# A financial adviser tells you that you can make your child

### Resolved Question:

A financial adviser tells you that you can make your child a millionaire if you just start saving early. You decide to put an equal amount each year into an investment account that earns 8 % interest per year, starting on the day your child is born. How much money would you need to invest each year [rounded to the nearest dollar] to accumulate a million for your child by the time they are 50 years old [You last deposit will be made on their 49th birthday.

\$8,000

\$1,614

18,000

\$2,347

Discussion 2
Jones Company has a target capital structure of 40% debt, 10% preferred stock, and 50% common equity. The company’s after tax cost of debt is 8%, its cost of preferred debt is 10%, its cost of retained earnings is 14%, and its cost of new common stock is 16%. The company stock has a beta of 1.2 and the company’s marginal tax rate is 35%. What is the company’s weighted average cost of capital if retained earnings are used to fund the common equity portion?
Please Show your work for the calculation solution : 11.20%
6.72%
16.80%
8.00%
Submitted: 2 months ago.
Category: Multiple Problems
Expert:  F. Naz replied 2 months ago.
1
FVIF of annuity = 1.08^50-1/.08*1.08 =(NNN) NNN-NNNNbr/>Yearly investment =(NNN) NNN-NNNN619.6718 = 1614 is the right answer

2
+.08*.4+.1*.1+.14*.5 = .112 or 11.20% is the right answer
F. Naz, B.Com
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Experience: have completed B.Com and CA Finalist
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Customer: replied 2 months ago.

What about the second question?

Customer: replied 2 months ago.

Just noticed it, thanks.

Expert:  F. Naz replied 2 months ago.
Remember , I am not paid unless you rate the answer positive, thanks.

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