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 $10,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $10,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 4.29% interest a sum of money that is sufficient to provide the 4 payments of $10,000 each. His deposit will be made today. a. How large must the deposit be? Round your answer to the nearest cent. b. 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 "O" if required

Explanation / Answer

a.

how large must the deposit be

=10000/(1+4.29%)^1+10000/(1+4.29%)^2+10000/(1+4.29%)^3+10000/(1+4.29%)^4=36052.23

b.

how much in account after the first withdrawal

=10000/(1+4.29%)^1+10000/(1+4.29%)^2+10000/(1+4.29%)^3

=27598.87

how much in account after the last withdrawal

=0 because deposit is made earlier just to sufficient for the withdrawal

the above is answer..

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