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Required Lump-Sum Payment To complete your last year in business school and then go through law...

Required Lump-Sum Payment

To complete your last year in business school and then go through law school, you will need $20,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $20,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 8.61% interest a sum of money that is sufficient to provide the 4 payments of $20,000 each. His deposit will be made today.

  1. How large must the deposit be? Round your answer to the nearest cent.
    $  
  2. 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
    $  

Solutions

Expert Solution

Lumpsum amount is $232,288.04

Alternative Answer:

a. $65,353

b. $50,979.89

c. $0

Follow whichever answer more suitable to you. I would follow the second solutions(Alternative Answer) if the same was asked to me in the exam.

jeff jeffy answered 6 hours ago
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