Problem 4-24 Required Lump-Sum Payment To complete your last year in business sc

Question

Problem 4-24 Required Lump-Sum Payment To complete your last year in business school and then go through law school, you will need $15,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $15,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 6.7% interest a sum of money that is sufficient to provide the 4 payments of $15,000 each. His deposit will be made today. How large must the deposit be? Round your answer to the nearest cent. $ How much will be in the account immediately after you make the first withdrawal? Round your answer to the nearest cent. $ How much will be in the account immediately after you make the last withdrawal? Round your answer to the nearest cent. Enter "0" if required $

Explanation / Answer

                                   K = N          
Present value of annuity = [(Annuity payment)/(1 + Required rate of return)^k]    
                                   k=1

                                   K = 4   
Present value of annuity = [(15000)/(1 +6.7/100)^k]    
                                   k=1

Deposit today = 51154.17

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