A father wants to set aside money for his 8-year old daughter\'s future educatio
ID: 2662699 • Letter: A
Question
A father wants to set aside money for his 8-year old daughter's future education, by making monthly deposits to a bank account that pay's 8 % per year, compunded annually. What equal monthly deposits must the father make- the first 1 month after her 9th birthday and the last on her 17th birthday-in order for her to withdraw $4000 on each of her next four birthdays (the 18th through the 21st)?I was provided with the answer. $103.80
But, I would like to know the steps through the problem that get me to that solution?
Explanation / Answer
8% / 12
8 X 12
-16,000
$119.52
Calculating Monthly Deposit Amount (Using Ms-Excel "PMT" Function): Interest Rate (Rate)8% / 12
Number of Payments (Nper)8 X 12
Future Value (FV) [$4,000 X 4]-16,000
Equal Monthly Deposit Amount (PMT)$119.52
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