Suppose That a Young Couple Has Just Had Their First

question 75

Multiple Choice

Suppose that a young couple has just had their first baby and they wish to insure that enough money will be available to pay for their child's college education.They decide to make deposits into an educational savings account on each of their daughter's birthdays,starting with her first birthday.Assume that the educational savings account will return a constant 7%.The parents deposit $2000 on their daughter's first birthday and plan to increase the size of their deposits by 5% each year.Assuming that the parents have already made the deposit for their daughter's 18th birthday,then the amount available for the daughter's college expenses on her 18th birthday is closest to:

• A)$42,825
• B)$97,331
• C)$67,998
• D)$103,063

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Definitions:

Unemployment Tax Rates

The percentages that employers are required to pay on behalf of their employees to the government for unemployment insurance.

Employer's Payroll

This encompasses the total amount of all compensation that a business must pay to its employees for a set period of time or on a given date.

May Wages

The total payroll expenses incurred for labor during the month of May.

FICA-Social Security Tax

A federal tax in the United States collected from both employees and employers to fund the Social Security program.