MrsBrown Is Considering Setting Up a College Fund for Her

question 16

Essay

Mrs.Brown is considering setting up a college fund for her grandson.Mrs.Brown wants to pay her grandson's tuition fees of $5,000 each year for four years.Assume that she saves an equal amount each year, and the first deposit is made one year from now.Interest rates will remain constant at 8 percent.How much must Mrs.Brown save each year? Assume her grandson will go to college in 18 years and tuition fees are paid once a year at the beginning of the year.

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Definitions:

Secured Claims

are creditor's claims that are protected by a security interest in the assets of the debtor, giving the creditor a right to repossess the collateral if the debtor fails to fulfill the obligations.

Unsecured Claims

Debts or claims for which the creditor does not have any collateral security.

Chapter 12

A type of bankruptcy proceeding in the United States that provides for adjustment of debts of a "family farmer" or "family fisherman."

Family Farmers

Small-scale farmers who own and operate their farms primarily with family labor, focusing on the sustainability of agriculture and rural communities.