Aunt Darla Has Agreed to Deposit a Lump Sum into an Account

question 64

Essay

Aunt Darla has agreed to deposit a lump sum into an account that pays 12% interest compounded annually in order to education. The niece estimated that she will need to withdraw $40,000 at the beginning of each year for four years to and books. Aunt Darla will deposit the lump sum on August 1, 2016, and the niece will make the first withdrawal on A
Required:
Determine the amount that Aunt Darla must deposit. Clearly label all work.

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Definitions:

Business Property Tax

A tax imposed on the real estate, equipment, and sometimes the inventory of a business.

Transfer Payments

Payments made by governments to individuals without any expectation of a good or service being provided in return, such as social security benefits and unemployment benefits.

Excise Tax

A tax levied on specific goods, services, or transactions, often focused on items such as alcohol, tobacco, and gasoline.

Demand Curves

A graph showing the relationship between the price of a good and the quantity of that good that consumers are willing to buy at different prices.