Module 4 Discussion Forum

Module 4 Discussion Forum - 2012 what is the required...

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E 6-10 John Rider wants to accumulate \$100,000 to be used for his daughter’s college education. He would like to have the amount available on December 31, 2016. Assume that the funds will accumulate in a certificate of deposit paying 8% interest compounded annually. 1. If John were to deposit a single amount, how much would he have to deposit on December 31, 2011? Present value of \$1 PV = \$100,000 (.68058) = \$68,058 2. If John were to make five equal deposits on each December 31, beginning on December 31,
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Unformatted text preview: 2012, what is the required deposit? Future value of an ordinary annuity of \$1 n=5 & i=8% (Graphic 6-3) \$100,000 / 5.8666 = \$17,045.65 3. If John were to make five equal deposits on each December 31, beginning on December 31, 2011, what is the required deposit? Future value of an annuity due of \$1 n=5 & i=8% (http://www.principlesofaccounting.com/ART/fv.pv.tables/fvofannuitydue.htm) \$100,000 / 6.3359 = \$15,783.08...
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