A father is planning to provide a 10-year trust fund for his son Gabriel. The amount...

 

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A father is planning to provide a 10-year trust fund for his son Gabriel. The amount deposited today will remain untouched until the end of the 10th year, but will gain interest at a rate of 10 percent compounded annually. The money will then be transferred to another account, which pays 5 percent. The intent is that Gabriel will withdraw the money in four equal annual payments of $X,000 each beginning at the end of year 10. The fund, which will help to pay for his higher education will be completely depleted after four payments. What amount should Gabriel's father deposit today? A father is planning to provide a 10-year trust fund for his son Gabriel. The amount deposited today will remain untouched until the end of the 10th year, but will gain interest at a rate of 10 percent compounded annually. The money will then be transferred to another account, which pays 5 percent. The intent is that Gabriel will withdraw the money in four equal annual payments of $X,000 each beginning at the end of year 10. The fund, which will help to pay for his higher education will be completely depleted after four payments. What amount should Gabriel's father deposit today?

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Heres a breakdown of how to solve this problem 1 Calculate the Future Value FV needed at the end of ... View the full answer