What amount should be deposited in the present so that $50,000 can be withdrawn every year for four years and the first withdrawal is made in two years? Assume the rate is 12% per year.


Q2. When Angelica turns 3 years old, her parents decide to make an investment fund to pay her College tuition. The withdrawal instructions are the following: $110,000 in her 18th birthday, $120,000 in her 19th birthday, $130,000 in her 20th birthday, $140,000 in her 21st birthday and finally $150,000 in her 22nd birthday. To achieve this, Angelica's parents decided to deposit an annual fixed amount of $20,000 every year on Angelica´s 3rd,4th,5th,6th, 7th, 8th, 9 and 10th birthdays, the fund pays 6% per year. What should be the amount of every yearly fixed deposit for her 11th, 12th, 13th, 14th, 15th, 16th and 17th birthdays?
 

Q3.   3, 4 and 5 years ago three equal deposits were made. These deposits will allow an engineer to withdraw $80,000 for his son's education today, and $80,000 every year for the next 5 years. If the interest rate is 7.5% per year, what was the amount of the three equal initial deposits for the years 3, 4 and 5?
 

Q4. What will be the present value of a series of 20 annual payments, if the first payment (at the end of the first year), is for $100,000 and each following payment is 5% higher to the previous one? The interest rate is 30% per year compounded annually.

Answer rating: 100% (QA)

Q1 To calculate the amount that should be deposited in the present to make 50000 withdrawals every year for four years with the first withdrawal in tw... View the full answer