Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jim is going to establish a University Fund for his daughter Jennifer, who is two year's old.He plans to make the first deposit of $10,000

Jim is going to establish a University Fund for his daughter Jennifer, who is two year's old.He plans to make the first deposit of $10,000 today and make another 5 annual deposits of this amount. After this, annual deposits of $15,000 will be made until Jennifer's 17th birthday. Given the long term nature of the investment, Jim anticipates an 4% pa return. The money is then to be transferred to an account for Jennifer on her 17th birthday and she will then withdraw the money in equal annual amounts for 6 years starting on her 18th birthday. Jade will only be able to earn 2% pa on her money.

(i) How much money will be available on Jennifer's 17th birthday?

(ii)a schedule showing the cash inflows and outflows of this fund.How much will Jennifer be able to spend each year?

(Your answers should be accurate to the nearest dollar)

Full explanation, please.

Thank you

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jeff Madura

5th edition

132994348, 978-0132994347

More Books

Students also viewed these Finance questions

Question

Write a paper about medication error system 2016.

Answered: 1 week ago