Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kim is a first - year student in college. On December 3 1 , 2 0 0 1 , Kim's parents opened a savings account

Kim is a first-year student in college. On December 31,2001, Kim's parents opened a savings account for her with an 8% interest rate and put an equal amount of money in it every year until (and including) December 31,2023(first deposit is 12/31/2001 and last deposit is 12/31/2023). Kim's parents do not make any more contributions.
Kim deposits $1,500 per year into the same account while in college (December 31,2024 until and including December 31,2027). Immediately after making that last deposit of $1,500 on December 31,2027, Kim has a bank balance is $150,000.
Draw a cash flow diagram from the bank's point of view assuming Kim withdraws the entire $150,000 balance on December 31,2027(immediately after making the last $1,500 deposit).
What was the magnitude of the equal, annual deposits made by Kim's parents?

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

Financial accounting

Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom

9th edition

978-0132751216, 132751127, 132751216, 978-0132751124

More Books

Students also viewed these Accounting questions