Suppose That You Wish to Save for Your Child's College

question 20

Multiple Choice

Suppose that you wish to save for your child's college education by opening up an educational IRA.You plan to deposit $100 per month into the SUPERANNUATION RA for the next 18 years.Assume that you will be able to earn 10%, compounded monthly, on your investment.How much will you have accumulated at the end of 18 years?

• A)$21 600
• B)$33 548
• C)$85 920
• D)$60 056

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Definitions:

Municipal Bonds

Bonds issued by local municipalities to finance public projects such as schools and highways; interest income is often exempt from federal income taxes.

Investment Interest Expense

The cost of interest on money borrowed to purchase taxable investments, which can sometimes be deducted from income for tax purposes.

Job Hunting

The process of actively seeking new employment, including activities such as applying for jobs, networking, and interviewing.

Deductible

The amount that a taxpayer must pay out-of-pocket before an insurance company will pay any expenses.