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8. You are pursuing a Bachelor's in Finance at a business school, and you will need $20,000 per year...

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8. You are pursuing a Bachelor's in Finance at a business school, and you will need $20,000 per year for the 

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8. You are pursuing a Bachelor's in Finance at a business school, and you will need $20,000 per year for the next 4 years to cover your college expenses. That is, you plan to withdraw $20,000 at the end of each of the next 4 years, starting one year from today. To support your college education, your parents decide to make a deposit today into a bank account paying an 8% annual interest. This deposit should be sufficient to cover the four $20,000 withdrawals you will make over the next 4 years. a. Draw a timeline to visualize the problem. b. How much must the deposit be? c. How much will be in the bank account immediately after you make the second withdrawal?

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SOLUTION a Timeline Year 0 Today Deposit Year 1 Withdrawal of 20 000 Year 2 Withdrawal of 20 000 Yea View the full answer


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Related Book For  answer-question
Fundamentals Of Corporate Finance

Fundamentals Of Corporate Finance

ISBN: 9780135811603

5th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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Question Details
Chapter # 20
Section: INTEGRATIVE CASE
Problem: 1
Posted Date: September 24, 2023 06:09:10
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