1 and 2 please. Show steps please and thank you!
*CPI from USA
Homework Answers
| 1) | Fund required at 18th brthday = $20000 | ||||
| Fund need to Deposit at 4th Birthday | |||||
| So, time will be 14 years (18-4) | |||||
| Inflation rate | 3% | ||||
| Bank int rate | 5% | Compounded annually | |||
| lets lump sum amount deposit today be "X" | |||||
| then | X*(1.03)^*14(1.05)^14 = 20000 | ||||
| X = 20000/(1.03)^14*(1.05)^14 | |||||
| X = 20000/1.5126*1.9799 | |||||
| X = 20000/2.9948 | |||||
| X =6678.242 | |||||
| Hence, amount need to be deposited at 4th birthday will be $6678.242 |
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1 and 2 please. Show steps please and thank you!
*CPI from USA
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