Joe and Sarah Fabozzi are saving for the college education of their 1 year old daughter, Beth. The Fabozzi's estimate that college expenses will run $35,000 pear year when their daughter reaches college in 17 years. In other words, the first withdrawal will be made on Beth's 18th Birthday and the last payment will be made on Beth's 17th Birthday. The expected interest rate while saving and in college is 6%. Assume today is Beth's first birthday and the first deposit will be made one year from today. Calculate the annual payment the Fabozzi's must make to the account so that their daughter will be completely supported through four years of college. (Enter a positive value and round to 2 decimals)

$4724

Explanation:

Involves 2 steps

In the first step we calculate the total value of savings as on her 18th birthday. This can be done using the Present Value (PV) function in Excel or any financial calculator.

Manually also it can be done by using the PVIFA table & looking up the factor for 6% interest rate column & 4 years row. The factor is 3.465. Then multiply the factor with 35,000 to get the same (approx.) result as above.

i.e. PV= PVIFA(4 years, 6%) * 35,000

The Excel screenshot is shown in attached file along with the formula:

In the next part, we treat this value as the future value of the annual savings of the parents. Note that they will start the savings from the next year, i.e. Beth's 2nd birthday & last payment will be on 17th birthday. So there will be 16 annual payments.

The calculation for the required annual savings in Excel is shown in the attached file (On a financial calculator also you can use the same PMT function with given inputs):

So they must save $4,724.07 annually for this purpose

answer; ///pegged exchange rate with the united states;

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.