Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jim is going to establish a University Fund for his daughter Jan, who has just been born.He plansto make the first deposit of $20,000 today

Jim is going to establish a University Fund for his daughter Jan, who has just been born.He plansto make the first deposit of $20,000 today and make another 8annual deposits of $5,000. After this, annual deposits of $10,000 will be made until Jan's 17th birthday. Given the long term nature of the investment, Jim anticipates a 5% pa return. The money is the transferred to an account for Janand she will then withdraw the money in equal monthlyamounts for 5 years starting on her 17th birthday. Jan will only be able to earn 3% pa on her money.

(i) How much will be available on Jan's 17th birthday, before the first withdrawal is made?

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

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

Management Science The Art Of Modeling With Spreadsheets

Authors: Stephen G. Powell, Kenneth R. Baker

3rd Edition

0470530677, 978-0470530672

More Books

Students also viewed these Finance questions

Question

Summarize the findings of psychotherapy effectiveness studies.

Answered: 1 week ago