On the day his baby was born, a father decided to establish a savings account for the child’s college education. Any money that is put into the account will earn an interest rate of 8% compounded annually. The father will make a series of annual deposits in equal amounts of $5,000 on each of his child’s birthdays from the 1st through the 18th, so that he can make withdrawals from the account on the child’s 18th birthday for child's college funds. Find the amount accumulated at the end of child's 18th birthday. (Also draw the cash flow diagram).
On the day his baby was born, a father decided to establish a savings account for the child’s college education. Any money that is put into the account will earn an interest rate of 8% compounded annually. The father will make a series of annual deposits in equal amounts of $5,000 on each of his child’s birthdays from the 1st through the 18th, so that he can make withdrawals from the account on the child’s 18th birthday for child's college funds. Find the amount accumulated at the end of child's 18th birthday. (Also draw the cash flow diagram).
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 30P
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On the day his baby was born, a father decided to establish a savings account for the child’s college education. Any money that is put into the account will earn an interest rate of 8% compounded annually. The father will make a series of annual deposits in equal amounts of $5,000 on each of his child’s birthdays from the 1st through the 18th, so that he can make withdrawals from the account on the child’s 18th birthday for child's college funds. Find the amount accumulated at the end of child's 18th birthday. (Also draw the cash flow diagram).
Transcribed Image Text:On the day his baby was born, a father decided to establish a savings account for the
child's college education. Any money that is put into the account will earn an interest
rate of 8% compounded annually. The father will make a series of annual deposits in
equal amounts of $5,000 on each of his child's birthdays from the 1st through the
18th, so that he can make withdrawals from the account on the child's 18th birthday
for child's college funds. Find the amount accumulated at the end of child's 18th
birthday. (Also draw the cash flow diagram).
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