Q2. It is your 6th birthday today. You have a trust fund with $50,000 that is...

Q2. It is your 6th birthday today. You have a trust fund with $50,000 that is earning 8% per year. You expect to withdraw $30,000 per year for 7 years starting on your 22nd birthday for graduate school. How much money will be left in the trust fund after your last withdrawal (rounded to the nearest $10)?

Solutions

Expert Solution

Value at the end of 21st birthday = 50,000(1.08)¹⁵ = $158,608.46

Calculating Future Value after withdrawal,

Using TVM Calculation,

FV = [PV = 158,608.46, PMT = -30,000, N = 7, I = 0.08]

FV = $4,142.93

jeff jeffy answered 1 year ago

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