Use the Information for the Question(s) Below

question 17

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 7%,then the present value of your son's private school education is closest to:

• A) $332,300
• B) $137,900
• C) $155,800
• D) $156,000

---

Definitions:

Therapeutic Effect

The beneficial health outcome or improvement observed from a treatment or intervention.

Hand Reflexology

A form of therapy that involves applying pressure to specific points on the hands believed to correspond with different parts of the body to promote healing and relieve stress.

Reflexology

An alternative medicine practice involving the application of pressure to specific points on the feet, hands, or ears, based on the belief that these points correspond to different organs and systems in the body.

Corresponding Body Part

A specific region or organ of the body that relates to, or is associated with, a particular function or activity.