Scaly Pete's son, Kyle, has decided to not go to college and be a DJ. Pete...

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Scaly Pete's son, Kyle, has decided to not go to college and be a DJ. Pete has consistently been putting annuity payments into a savings account for Kyle's college fund. Pete gives the account over to Kyle to help start his DJ business. a. If the savings account is valued at $25,000 in the present day, and Kyle wishes to withdraw all the money in 10 equal yearly sums, how much does he withdraw each year? Assume that the savings account pays 8% nominal annual interest, compounded 8% nominal a quarterly. (7 points) b. Instead of withdrawing annually, Kyle wants to receive quarterly annuity payments of $1,500 for 5 years. Use the same interest from part a. How much is left in the account at the end of the 5 years if the present value is the same as part a? (8 points) Scaly Pete's son, Kyle, has decided to not go to college and be a DJ. Pete has consistently been putting annuity payments into a savings account for Kyle's college fund. Pete gives the account over to Kyle to help start his DJ business. a. If the savings account is valued at $25,000 in the present day, and Kyle wishes to withdraw all the money in 10 equal yearly sums, how much does he withdraw each year? Assume that the savings account pays 8% nominal annual interest, compounded 8% nominal a quarterly. (7 points) b. Instead of withdrawing annually, Kyle wants to receive quarterly annuity payments of $1,500 for 5 years. Use the same interest from part a. How much is left in the account at the end of the 5 years if the present value is the same as part a? (8 points)

Answer rating: 100% (QA)

a To find out how much Kyle should withdraw each year we can use the formula for the future value of ... View the full answer