Answered

Westonci.ca is your trusted source for finding answers to all your questions. Ask, explore, and learn with our expert community. Get quick and reliable solutions to your questions from a community of experienced experts on our platform. Join our Q&A platform to connect with experts dedicated to providing accurate answers to your questions in various fields.

Beginning three months from now, you want to be able to withdraw $1,500 each quarter from your bank account to cover college expenses over the next 4 years. The account pays 1.25 percent interest per quarter. How much do you need to have in your account today to meet your expense needs over the next 4 years?

Sagot :

abiolataiwo2015

Answer:

$21,630.44

Explanation:

Calculation for How much do you need to have in your account today to meet your expense needs over the next 4 years

Rate Per quarter =1.25%

PMT =1,500

Number of Periods =4*4 =16

Based on the information given we are going to find the Present value (PV) by using annuity due formula

PV =PMT*((1-(1+r)^-n)/r)

Let plug in the formula

PV=$1,500*((1-(1+0.0125)^-16)/0.0125)

PV=$1,,500*((1-(1.0125)^-16)/0.0125)

PV=$1,500*((1-0.8197463466))/0.0125)

PV=$1,500*(0.1802536534/0.0125)

PV=$1,500*14.420292272

PV=$21,630.44

Therefore the amount you will need to have in your account today to meet your expense needs over the next 4 years will be $21,630.44

Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. We're dedicated to helping you find the answers you need at Westonci.ca. Don't hesitate to return for more.