Use the Information for the Question(s)below

question 21

Multiple Choice

Use the information for the question(s) below.
Assume that you are 30 years old today and that you are planning on retirement at age 65.Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work.To save for your retirement,you plan on making annual contributions to a retirement account.Your first contribution will be made on your 31st birthday and will be 8% of this year's salary.Likewise,you expect to deposit 8% of your salary each year until you reach age 65.Assume that the rate of interest is 7%.
-Your son is about to start kindergarten in a private school.Currently,the tuition is $12,000 per year,payable at the start of the school year.You expect annual tuition increases to average 6% per year over the next 13 years.Assuming that your son remains in this private school through high school and that your current interest rate is 6%,then the present value of your son's private school education is closest to:

• A)$106,230.
• B)$156,000.
• C)$137,900.
• D)This problem cannot be solved.

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Definitions:

Anticipatory Smiling

A social signal where an individual smiles in anticipation of a positive interaction.

Infant

A baby or small child, usually not yet a year old.

Strange Situation

A procedure developed by psychologist Mary Ainsworth to assess attachment styles in children by observing their reactions to separations and reunions with their caregiver.

Mary Ainsworth

A developmental psychologist known for her work in the field of attachment theory, particularly the Strange Situation assessment.