5-2: Future Values 5-7: Future Value of an Ordinary Annuity

Required lump sum payment

Starting next year, you will need $30,000 annually for 4 years to complete your education. (One year from today you will withdraw the first $30,000.) Your uncle deposits an amount today in a bank paying 4% annual interest, which will provide the needed $30,000 payments.

1. How large must the deposit be? Round your answer to the nearest cent. $

2. How much will be in the account immediately after you make the first withdrawal? Round your answer to the nearest cent. $