8. You are pursuing a Bachelor's in Finance at a business school, and you will need...
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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? 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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Answer rating: 100% (QA)
SOLUTION a Timeline Year 0 Today Deposit Year 1 Withdrawal of 20000 Year 2 Withdrawal of 20000 Year ... View the full answer
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Posted Date:
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