Ray Cheng

Time Value of Money Problem

PART I
STEP ONE: TOTAL COST OF COLLEGE
TOTAL COST = ($50,000*(1.05^5)) + ($50,000*(1.05^6)) + ($50,000*(1.05^7)) +
($50,000*(1.05^8))
TOTAL COST = $275,046.65

STEP TWO: DEPOSITS

X = DEPOSITS INTO ACCOUNT
$0 = (((((((((((((((((($7,500+X)*1.06)+X)*1.06)+X)*1.06)+X)*1.06)+X)*1.06)+X)$63,814.08)*1.06)-$67,004.78)*1.06)-$70,355.02)*1.06)-$73,872.77)
THUS X = $34,650.74
The father must deposit $34,650.74
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Ray Cheng

PART II
He should invest in stocks that show both technical and financial indicators of growth.
Since stocks can be very risky, he should employ hedging strategies that reduce risk.
Some strategies include the bear-put strategy and even buying long-term put options.
These strategies require less capital and do not reduce profit potential. He should sign up
for EASYSTOCK.COM and use the trading system available to filter out the best stocks
available with open technical indicators based on complex algorithms comprised of
standard moving averages, relative strength indexes, moving average conversion
diversion, consumer confidence indexes, and etc. Here is a chart from
EASYSTOCK.COM of a stock that is showing huge bullish potential.

You can see that the bullish index is a very high 116. This is because many indicators
with amazingly consistent trends over the last 20 years are open. For example, the EMA
indicator has had a total return of 2,631.84% even when the stock itself has had a
buy/hold return of -87.19%. I believe that if the father can utilize this trading system
along with some hedging strategies, he can have returns far beyond the 6-10%.