Jack’s friend plans to buy a boat 45 years from now, when he retires. Today’s price...

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Jack’s friend plans to buy a boat 45 years from now, when heretires. Today’s price for the boat is $300,000. The price isexpected to rise 3% per year. The friend also wants to send hischild to BC in 12 years. College is expected to cost $117,000 inthe child’s first year, growing at 4% per year while in school.College lasts for 4 years and the first payment is due the firstday of school. The friend has $25000 saved now and expects to put acertain fraction of his salary away each year, starting in 1 yearwith the final payment on the retirement date. His salary will growby 2% per year. He currently makes $120,000. If Jack can earn 6%per year on the friend’s investments, what fraction of the friend’ssalary must be saved?

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All financials below are in Todays price for the boat is 300000 The price is expected to rise 3 per year Price of the boat at the end of 45 years 300000 x 1 345 1134479 i interest rate 6 PV of the price of boat today t 0 1134479 1 i45 1134479 1 645 8241997 The friend See Answer

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Jack’s friend plans to buy a boat 45 years from now, when heretires. Today’s price for the boat is $300,000. The price isexpected to rise 3% per year. The friend also wants to send hischild to BC in 12 years. College is expected to cost $117,000 inthe child’s first year, growing at 4% per year while in school.College lasts for 4 years and the first payment is due the firstday of school. The friend has $25000 saved now and expects to put acertain fraction of his salary away each year, starting in 1 yearwith the final payment on the retirement date. His salary will growby 2% per year. He currently makes $120,000. If Jack can earn 6%per year on the friend’s investments, what fraction of the friend’ssalary must be saved?