Question
Question 2 Jim is going to establish a University Fund for his daughter Jan, who has just been born.He plans to make the first deposit
Question 2
Jim is going to establish a University Fund for his daughter Jan, who has just been born.He plans to make the first deposit of $20,000 today and make another 8 annual deposits of $5,000. After this, annual deposits of $10,000 will be made until Jan's 17thbirthday. Given the long term nature of the investment, Jim anticipates a 5% pa return. The money is the transferred to an account for Jan and she will then withdraw the money in equal monthly amounts for 5 years starting on her 17thbirthday. Jan will only be able to earn 3% pa on her money.
(i) How much will be available on Jan's 17thbirthday, before the first withdrawal is made?
(ii) schedule showing the cash inflows and outflows of this fund.How much will Jan be able to spend each month?
(Your answers should be accurate to the nearest dollar)
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