Trust Fund. Bob and Ann MacKenzie have a new grandchild, Brenda, and want to create a trust fund for her that will yield $250,000 on her 24 th birthday. a. What lump sum should they deposit now at 5.8%, compounded continuously, to achieve $250,000? b. The amount in part (a) is more than they can afford, so they decide to invest a constant amount, R ( t ) dollars per year. Find R ( t ) such that the accumulated future value of the continuous money stream is $250,000, assuming an interest rate of 5.8%, compounded continuously.
Trust Fund. Bob and Ann MacKenzie have a new grandchild, Brenda, and want to create a trust fund for her that will yield $250,000 on her 24 th birthday. a. What lump sum should they deposit now at 5.8%, compounded continuously, to achieve $250,000? b. The amount in part (a) is more than they can afford, so they decide to invest a constant amount, R ( t ) dollars per year. Find R ( t ) such that the accumulated future value of the continuous money stream is $250,000, assuming an interest rate of 5.8%, compounded continuously.
Solution Summary: The author calculates the value of the lump sum that should be deposited by Bob and Ann at 5.8% compounded continuously to achieve 250,000.
Trust Fund. Bob and Ann MacKenzie have a new grandchild, Brenda, and want to create a trust fund for her that will yield $250,000 on her 24th birthday.
a. What lump sum should they deposit now at 5.8%, compounded continuously, to achieve $250,000?
b. The amount in part (a) is more than they can afford, so they decide to invest a constant amount,
R
(
t
)
dollars per year. Find
R
(
t
)
such that the accumulated future value of the continuous money stream is $250,000, assuming an interest rate of 5.8%, compounded continuously.
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