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26 FSDNPT (HW)

# 26 FSDNPT (HW) - c \$37,576.16 d \$36,892.25 e \$34,938.02...

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Beginning one year from now, you want to start sending annual payments of \$5,000 to your recently disabled father in order to help him survive financially over the next 10 years. If you open an account at 7% interest per year, what is the minimum one-time deposit amount necessary to make these payments to your father over the next 10 years? a. \$33,423.87 b. \$35,117.91

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Unformatted text preview: c. \$37,576.16 d. \$36,892.25 e. \$34,938.02 Correct Answer: \$35,117.91 Algebraic Solution: PV = C[(1-1/[(1 + r ) t ])/r] Solving for PV, we get: PV = 5,000[(1-1/[(1.07) 10 ])/.07] PV = 5,000(7.02358154) PV = 35,117.90770 Calculator Solution: 10 7-35,117.90770 5,000 N I/Y PV PMT FV or 35,117.91, since it is impossible to deposit \$35,117.90770 in a bank. Notes: none...
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26 FSDNPT (HW) - c \$37,576.16 d \$36,892.25 e \$34,938.02...

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