Required Lump-Sum PaymentTo complete your last year in business school and then go through law school, you will need $5,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $5,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 7.43% interest a sum of money that is sufficient to provide the 4 payments of $5,000 each. His deposit will be made today.How large must the deposit be? Round your answer to the nearest cent.How much will be in the account immediately after you make the first withdrawal? Round your answer to the nearest cent.3. How much will be in the account immediately after you make the last withdrawal? Round your answer to the nearest cent. Enter "0" if required

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Asked Aug 29, 2019
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Required Lump-Sum Payment

To complete your last year in business school and then go through law school, you will need $5,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $5,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 7.43% interest a sum of money that is sufficient to provide the 4 payments of $5,000 each. His deposit will be made today.

  1. How large must the deposit be? Round your answer to the nearest cent.


  2. How much will be in the account immediately after you make the first withdrawal? Round your answer to the nearest cent.


    3. How much will be in the account immediately after you make the last withdrawal? Round your answer to the nearest cent. Enter "0" if required

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Expert Answer

Step 1

Answer to the requirement 1 is as follo...

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Answer Formula used 1 Compute the required Deposit amount Given, PMT 5,000, Years 4, Rate 7.43% $16,772.94 Deposit amount = -PV(7.43%,4-5000)

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