On the day his grandson was born, a man deposited to a trust company a sufficient amount of money so that the boy could receive five annual payments of P10,000 each for his college tuition fees, starting with his 18th birthday. Interest at the rate of 12% per annum was to be paid on all amounts on deposit. There was also a provision that the grandson could elect to withdraw no annual payments and receive a single lump amount on his 25th birthday. The grandson chose this option. (a) How much did the boy receive as the single payment? (b) How much did the grandson deposit?
On the day his grandson was born, a man deposited to a trust company a sufficient amount of money so that the boy could receive five annual payments of P10,000 each for his college tuition fees, starting with his 18th birthday. Interest at the rate of 12% per annum was to be paid on all amounts on deposit. There was also a provision that the grandson could elect to withdraw no annual payments and receive a single lump amount on his 25th birthday. The grandson chose this option. (a) How much did the boy receive as the single payment? (b) How much did the grandson deposit?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On the day his grandson was born, a man deposited to a trust company a sufficient amount of money so that the boy could receive five annual payments of P10,000 each for his college tuition fees, starting with his 18th birthday. Interest at the rate of 12% per annum was to be paid on all amounts on deposit. There was also a provision that the grandson could elect to withdraw no annual payments and receive a single lump amount on his 25th birthday. The grandson chose this option.
(a) How much did the boy receive as the single payment?
(b) How much did the grandson deposit?
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