Steve and Ed are cousins who were both born on the same day,and both turned 25 today.Their grandfather began putting $2,500 per year into a trust fund for Steve on his 20th birthday,and he just made a 6th payment into the fund.The grandfather (or his estate's trustee) will make 40 more $2,500 payments until a 46th and final payment is made on Steve's 65th birthday.The grandfather set things up this way because he wants Steve to work,not be a "trust fund baby," but he also wants to ensure that Steve is provided for in his old age.
Until now,the grandfather has been disappointed with Ed,hence has not given him anything.However,they recently reconciled,and the grandfather decided to make an equivalent provision for Ed.He will make the first payment to a trust for Ed today,and he has instructed his trustee to make 40 additional equal annual payments until Ed turns 65,when the 41st and final payment will be made.If both trusts earn an annual return of 8%,how much must the grandfather put into Ed's trust today and each subsequent year to enable him to have the same retirement nest egg as Steve after the last payment is made on their 65th birthday?
A) $3,726
B) $3,912
C) $4,107
D) $4,313
E) $4,528
Correct Answer:
Verified
Q102: Suppose you borrowed $15,000 at a rate
Q153: Suppose you deposited $5,000 in a bank
Q154: Your sister turned 35 today,and she is
Q155: Your subscription to Investing Wisely Weekly is
Q156: Your uncle will sell you his bicycle
Q158: Farmers Bank offers to lend you $50,000
Q160: Your child's orthodontist offers you two alternative
Q161: After graduation,you plan to work for Dynamo
Q162: John and Daphne are saving for their
Q163: You are negotiating to make a 7-year
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents