Soon-to-be proud parents of a new born baby are planning to establish a scholarship fund for their baby. They plan to deposit a lump sum amount of money in an investment account on the day she is born so that she would be able to withdrawal $24,000 per year from her 17th to her 25th birthdays (i.e., 9 annual withdrawals). What would be the lump sum deposit if the fund is expected to earn an interest rate of 10% per year. The lump sum amount is O A. $27,339 O B. $27,861 OC. $54,289 O D. $59,723 O E. $30,076
Soon-to-be proud parents of a new born baby are planning to establish a scholarship fund for their baby. They plan to deposit a lump sum amount of money in an investment account on the day she is born so that she would be able to withdrawal $24,000 per year from her 17th to her 25th birthdays (i.e., 9 annual withdrawals). What would be the lump sum deposit if the fund is expected to earn an interest rate of 10% per year. The lump sum amount is O A. $27,339 O B. $27,861 OC. $54,289 O D. $59,723 O E. $30,076
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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Soon-to-be proud parents of a new born baby are planning to establish a scholarship fund for their baby. They plan to deposit a lump sum amount of money in an investment account on the day she is born so that she would be able to withdrawal $24,000 per year from her 17th to her 25th birthdays (i.e., 9 annual withdrawals). What would be the lump sum deposit if the fund is expected to earn an interest rate of 10% per year.
Transcribed Image Text:Soon-to-be proud parents of a new born baby are planning to establish a scholarship fund for their baby. They plan to deposit a lump sum amount of money in an investment
account on the day she is born so that she would be able to withdrawal $24,000 per year from her 17th to her 25th birthdays (i.e., 9 annual withdrawals). What would be the
lump sum deposit if the fund is expected to earn an interest rate of 10% per year.
.....
The lump sum amount is
O A. $27,339
O B. $27,861
O C. $54,289
O D. $59,723
O E. $30,076
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