N1

13. Trust Fuad As a gift for their newly born daughter's 25 th birthaday, the Smiths want to give her at that time a sum of money which has the same buying power as does$25,000on the date of her birth. To accomplish this, they will make a single initial payment into a trust ftrd set up specifically for the purpose. (a) Assume that the anaual effective rate of inflation is3.5%. In 25 years, what sum will have the same buying power as does$25,000at the date of the Smith's daughter's birth? Round your answer to the nearest dollar. (b) What should be the amount of the single initial paymen into the fund if interest is compounded continuously at an annual rate of4.5%? Round your answer to the ncarest dollar.