2. Obrey will start attending college in September 2024 at which time she will n

Question

2. Obrey will start attending college in September 2024 at which time she will need $10,000 for the first year of study. Her costs at college for the next three years are estimated at $12,000, $13,000, and $14,000 respectively. Obrey’s family plans to make equal payments to a money market fund which yields 10%, the first payment will be paid in September 2012 and the last in September 2024. What is the size of the annual payments the family must make if the fund is to supply Obrey with the above estimates

Explanation / Answer

Present value on September 2024=10000/1.1+12000/1.1^2+13000/1.1^3+14000/1.1^4=38337.545

Annual savings=PMT(10%,13,0,38337.545)=1563.35

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.