How much must be invested today to make four annual withdrawals of $20,000 each for tuition payments if you can earn 8% compounded annually on your investment and the first withdrawal will take place in one year? (Round to the nearest whole dollar)
A) $66,243
B) $51,242
C) $79,854
D) $47,393
E) $57,341

Question

Quizplus · Accepted Answer

PV = PMT × 11ea7fdb_fc1b_b128_a768_31a8a5adcb50_TB2902_11 PV = 20,000 × 11ea7fdb_fc1b_b129_a768_d9f97c60f4f4_TB2902_11 = $66,242.54
Using a financial calculator:
N = 4, I/Y = 8, PMT = -20,000, FV = 0, cpt PV = $66,242.54

How Much Must Be Invested Today to Make Four Annual