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AAFM GLO_CWM_LVL_1 Exam - Topic 9 Question 21 Discussion

Rhona has a daughter Zena five years old. She wants to plan for Zena's education and has found out that she would be requiring 2,75,000 at her age 18 and another 4,50,000 on her age 25. She also wants to have Rs. 10,00,000 for Zena's Marriage which she expects at the age of 28. She wants to deposit the entire amount for these expenses today in an account that pays a ROI of 15% per annum compounded annually. What would this amount be?
D) 112365
A) 40174
B) 27495
C) 144695

AAFM GLO_CWM_LVL_1 Exam - Topic 9 Question 21 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam
Question #: 21
Topic #: 9
[All GLO_CWM_LVL_1 Questions]

Rhona has a daughter Zena five years old. She wants to plan for Zena's education and has found out that she would be requiring 2,75,000 at her age 18 and another 4,50,000 on her age 25. She also wants to have Rs. 10,00,000 for Zena's Marriage which she expects at the age of 28. She wants to deposit the entire amount for these expenses today in an account that pays a ROI of 15% per annum compounded annually. What would this amount be?

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Suggested Answer: D

by Gail at May 07, 2022, 06:06 PM

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Shayne
7 months ago
Definitely going with option C, seems right!
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Mohammad
7 months ago
Wait, how much do you need to invest today?
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Brett
7 months ago
I think the ROI is a bit optimistic at 15%.
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Annamae
7 months ago
}
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Nidia
7 months ago
]
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Page
8 months ago
}
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Maryann
8 months ago
"Candidate 4",
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Josefa
8 months ago
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Billye
8 months ago
},
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Delisa
8 months ago
"For age 25 (20 years): ≈ 450000 / 1.15^20 ≈ 27k; for marriage at 28 (23 years): ≈ 1,000,000 / 1.15^23 ≈ 40k."
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Maryann
8 months ago
"Candidate 3",
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Lili
9 months ago
{
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Beckie
9 months ago
That's a total of 7,25,000 needed for education and marriage!
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Felix
9 months ago
40174? Really? That seems way too low for all those expenses!
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Delisa
9 months ago
"Sum around 112k; option D. This reminds me of a practice question on funding education with PV of multiple cash flows."
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Marcos
10 months ago
},
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Delisa
10 months ago
"For age 18 (13 years), PV ≈ 275000 / 1.15^13, about 44k."
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Maryann
10 months ago
"Candidate 2",
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Shaun
10 months ago
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Gaston
10 months ago
},
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Delisa
10 months ago
"This is a PV of multiple future costs—discount each to today at 15% and sum."
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Maryann
11 months ago
"Candidate 1",
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Charlena
11 months ago
{
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Jennie
11 months ago
[
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Lenita
11 months ago
{
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Rebbecca
11 months ago
I've got a good feeling about this one. Boundary Analysis and Equivalence Partitioning are both common verification techniques, so I'll go with one of those.
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Rikki
11 months ago
Hmm, I'm a bit confused about the differences between SAS and ECS. I'll need to review my notes on the capabilities of each platform before I can confidently answer this.
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Timothy
12 months ago
Okay, this looks like a future value calculation problem. Need to discount each amount back to present value with different time periods.
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