Grandpa Brown Has Agreed to Deposit a Lump Sum into an Account

question 56

Essay

Grandpa Brown has agreed to deposit a lump sum into an account that pays 12% interest compounded annually in order to pay for his granddaughter's college education.The granddaughter estimated that she will need to withdraw $40, 000 at the beginning of each year for four years to pay for room, board, tuition, and books.Grandpa will deposit the lump sum on August 1, 2010, and the granddaughter will make the first withdrawal on September 1, 2016.
Required:
Determine the amount that Grandpa Brown must deposit.Clearly label all work.

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