Trent and Doris Phillips have a new grandchild, William. They want to create a trust fund for him that will yield $280,000 on his 18th birthday. a) What lump sum would they have to deposit now at 5.4%, compounded continuously, to achieve $280,000? b) Trent and Doris decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future value of the continuous money stream is $280,000, assuming an interest rate of 5.4%, compounded continuously. a) To achieve $280,000, they would have to deposit $. (Round to the nearest cent as needed.) b) To achieve $280,000, they would need a constant money stream of $ (Round to the nearest cent as needed.) per year.
Trent and Doris Phillips have a new grandchild, William. They want to create a trust fund for him that will yield $280,000 on his 18th birthday. a) What lump sum would they have to deposit now at 5.4%, compounded continuously, to achieve $280,000? b) Trent and Doris decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future value of the continuous money stream is $280,000, assuming an interest rate of 5.4%, compounded continuously. a) To achieve $280,000, they would have to deposit $. (Round to the nearest cent as needed.) b) To achieve $280,000, they would need a constant money stream of $ (Round to the nearest cent as needed.) per year.
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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Transcribed Image Text:Trent and Doris Phillips have a new grandchild, William. They want to create a trust fund for him that will yield $280,000 on his 18th
birthday.
a) What lump sum would they have to deposit now at 5.4%, compounded continuously, to achieve $280,000?
b) Trent and Doris decide instead to invest a constant money stream of R(t) dollars per year. Find R(t) such that the accumulated future
value of the continuous money stream is $280,000, assuming an interest rate of 5.4%, compounded continuously.
a) To achieve $280,000, they would have to deposit $
(Round to the nearest cent as needed.)
b) To achieve $280,000, they would need a constant money stream of $ per year.
(Round to the nearest cent as needed.)
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