Yumi's grandparents presented her with a gift of $18,000 when she was 8 years old to be used for her college education. Over the next 9 years, until she turned 17, Yumi's parents had invested her money in a tax-free account that had yielded interest at the rate of 3.5%/year compounded monthly. Upon turning 17, Yumi now plans to withdraw her funds in equal annual installments over the next 4 years, starting at age 18. If the college fund is expected to earn interest at the rate of 4%/year, compounded annually, what will be the size of each installment? (Assume no interest is accrued from the point she turns 17 until she makes the first withdrawal. Round your answer to the nearest cent.) $ 5805.62 Need Help? Read It Watch It
Yumi's grandparents presented her with a gift of $18,000 when she was 8 years old to be used for her college education. Over the next 9 years, until she turned 17, Yumi's parents had invested her money in a tax-free account that had yielded interest at the rate of 3.5%/year compounded monthly. Upon turning 17, Yumi now plans to withdraw her funds in equal annual installments over the next 4 years, starting at age 18. If the college fund is expected to earn interest at the rate of 4%/year, compounded annually, what will be the size of each installment? (Assume no interest is accrued from the point she turns 17 until she makes the first withdrawal. Round your answer to the nearest cent.) $ 5805.62 Need Help? Read It Watch It
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
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Transcribed Image Text:Yumi's grandparents presented her with a gift of $18,000 when she was 8 years old to be used for her college education. Over the next 9 years, until she turned 17, Yumi's parents had
invested her money in a tax-free account that had yielded interest at the rate of 3.5%/year compounded monthly. Upon turning 17, Yumi now plans to withdraw her funds in equal annual
installments over the next 4 years, starting at age 18. If the college fund is expected to earn interest at the rate of 4%/year, compounded annually, what will be the size of each
installment? (Assume no interest is accrued from the point she turns 17 until she makes the first withdrawal. Round your answer to the nearest cent.)
$ 5805.62
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