Beginning three months from now, you want to be able to withdraw $3,500 each qua

Question

Beginning three months from now, you want to be able to withdraw $3,500 each quarter from your bank account to cover college expenses over the next four years

If the account pays .75 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four years? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Beginning three months from now, you want to be able to withdraw $3,500 each quarter from your bank account to cover college expenses over the next four years

Explanation / Answer

First we will calculate future value of the quarter receipts, Using financial calculator, Enter, N = 16 (4*4), I = 0.75, PMT = 3500, and press FV key, the total amount after 4 years will be $59,263

Now, the amount needed today will be present value of $59,263, using financial calculator, Enter, N = 16 (4*4), I = 0.75, FV = 59,263 and press PV key, the total amount needed today will be $52,585.

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