Mrs. Adele E. had four grandchildren, the oldest of which would be entering college in ten years. She wanted to provide assistance for their education by giving each child $10,000 a year for the four years that each would be in college. She currently had about $40,000 in the bank from the sale of a small house near the Boardwalk and was wondering whether or not this could be invested to earn enough to provide for the $160,000 that would be needed for the four grandchildren.

In reading the file Larson learned that the first child would start college in exactly ten years, the second two years later, the third one year after that and the fourth two years after the third. The funds would be left in the investment and withdrawn only as needed. The expectation was that at the end of the last year of the last childs college experience, the account would be exhausted and have a zero balance. Larson felt that 12% per year, compounded annually would be a reasonable estimate for a return on the $40,000 investment over its life.

For Case 1, is the $40,000 sufficient to provide for the 4 scholarships, paying the money as needed?