Question
In: Accounting
Diana is saving for her education. She will deposit some money into a savings account today...
Diana is saving for her education. She will deposit some money into a savings account today and in addition, deposit $500 per month for the next 2 years (24 deposits) starting one month from now. Her goal is to have enough money in the account so that she can withdraw $3,000 per month for 4 years (48 withdrawals) while she attends college and still have $8,000 left at the end for a trip to South America to celebrate her graduation. Her first withdrawal will be exactly 2 years from now when she starts college. Assume the account earns 3% compounded monthly during the entire 6 years.
How much does Diana need to deposit today? ANSWER: (in 2 decimal places),
To solve this problem, you will be creating a table with the following format.
|
B/E |
P/Y |
C/Y |
N |
I/Y |
PV |
PMT |
FV |
|
A=? |
|||||||
|
B=? |
C=? |
Type the value of A below.
Type the value of B below.
Type the value of C below.
Solutions
Expert Solution
| Month | 72 | Intt rate = | 0.25 | 100.25 | ||
| Month End | End balance | Withdrawal | Deposit in Current Month | Net = deposit - withdrawal | Interest | Opening value |
| 73 | 8000.0 | 0 | 0 | 19.95 | 7980.05 | |
| 72 | 7980.0 | 3000 | 0 | -3000 | 27.38 | 10952.67 |
| 71 | 10952.7 | 3000 | 0 | -3000 | 34.79 | 13917.87 |
| 70 | 13917.9 | 3000 | 0 | -3000 | 42.19 | 16875.68 |
| 69 | 16875.7 | 3000 | 0 | -3000 | 49.57 | 19826.12 |
| 68 | 19826.1 | 3000 | 0 | -3000 | 56.92 | 22769.20 |
| 67 | 22769.2 | 3000 | 0 | -3000 | 64.26 | 25704.93 |
| 66 | 25704.9 | 3000 | 0 | -3000 | 71.58 | 28633.35 |
| 65 | 28633.4 | 3000 | 0 | -3000 | 78.89 | 31554.46 |
| 64 | 31554.5 | 3000 | 0 | -3000 | 86.17 | 34468.29 |
| 63 | 34468.3 | 3000 | 0 | -3000 | 93.44 | 37374.86 |
| 62 | 37374.9 | 3000 | 0 | -3000 | 100.69 | 40274.17 |
| 61 | 40274.2 | 3000 | 0 | -3000 | 107.92 | 43166.26 |
| 60 | 43166.3 | 3000 | 0 | -3000 | 115.13 | 46051.13 |
| 59 | 46051.1 | 3000 | 0 | -3000 | 122.32 | 48928.81 |
| 58 | 48928.8 | 3000 | 0 | -3000 | 129.50 | 51799.31 |
| 57 | 51799.3 | 3000 | 0 | -3000 | 136.66 | 54662.65 |
| 56 | 54662.7 | 3000 | 0 | -3000 | 143.80 | 57518.85 |
| 55 | 57518.9 | 3000 | 0 | -3000 | 150.92 | 60367.93 |
| 54 | 60367.9 | 3000 | 0 | -3000 | 158.02 | 63209.91 |
| 53 | 63209.9 | 3000 | 0 | -3000 | 165.11 | 66044.80 |
| 52 | 66044.8 | 3000 | 0 | -3000 | 172.18 | 68872.62 |
| 51 | 68872.6 | 3000 | 0 | -3000 | 179.23 | 71693.38 |
| 50 | 71693.4 | 3000 | 0 | -3000 | 186.27 | 74507.11 |
| 49 | 74507.1 | 3000 | 0 | -3000 | 193.28 | 77313.83 |
| 48 | 77313.8 | 3000 | 0 | -3000 | 200.28 | 80113.55 |
| 47 | 80113.5 | 3000 | 0 | -3000 | 207.27 | 82906.28 |
| 46 | 82906.3 | 3000 | 0 | -3000 | 214.23 | 85692.05 |
| 45 | 85692.0 | 3000 | 0 | -3000 | 221.18 | 88470.87 |
| 44 | 88470.9 | 3000 | 0 | -3000 | 228.11 | 91242.77 |
| 43 | 91242.8 | 3000 | 0 | -3000 | 235.02 | 94007.75 |
| 42 | 94007.7 | 3000 | 0 | -3000 | 241.91 | 96765.83 |
| 41 | 96765.8 | 3000 | 0 | -3000 | 248.79 | 99517.04 |
| 40 | 99517.0 | 3000 | 0 | -3000 | 255.65 | 102261.39 |
| 39 | 102261.4 | 3000 | 0 | -3000 | 262.50 | 104998.89 |
| 38 | 104998.9 | 3000 | 0 | -3000 | 269.32 | 107729.56 |
| 37 | 107729.6 | 3000 | 0 | -3000 | 276.13 | 110453.43 |
| 36 | 110453.4 | 3000 | 0 | -3000 | 282.93 | 113170.50 |
| 35 | 113170.5 | 3000 | 0 | -3000 | 289.70 | 115880.80 |
| 34 | 115880.8 | 3000 | 0 | -3000 | 296.46 | 118584.34 |
| 33 | 118584.3 | 3000 | 0 | -3000 | 303.20 | 121281.14 |
| 32 | 121281.1 | 3000 | 0 | -3000 | 309.93 | 123971.21 |
| 31 | 123971.2 | 3000 | 0 | -3000 | 316.64 | 126654.57 |
| 30 | 126654.6 | 3000 | 0 | -3000 | 323.33 | 129331.25 |
| 29 | 129331.2 | 3000 | 0 | -3000 | 330.00 | 132001.24 |
| 28 | 132001.2 | 3000 | 0 | -3000 | 336.66 | 134664.58 |
| 27 | 134664.6 | 3000 | 0 | -3000 | 343.30 | 137321.28 |
| 26 | 137321.3 | 3000 | 0 | -3000 | 349.93 | 139971.35 |
| 25 | 139971.4 | 3000 | 0 | -3000 | 356.54 | 142614.81 |
| 24 | 142614.8 | 500 | 500 | 356.54 | 141758.28 | |
| 23 | 141758.3 | 500 | 500 | 353.51 | 141404.76 | |
| 22 | 141404.8 |
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