The Solution to This Problem Requires Time Value of Money

question 39

Multiple Choice

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
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Denise wants to help pay for her niece's college tuition.Her niece will begin college in one year.How much would Denise need to put into a savings account today at 6% so that her niece can withdraw $10,000 per year for four years and reduce the account balance to zero at the end of the four years?

• A)$31,680
• B)$34,650
• C)$37,600
• D)$37,720

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Definitions:

Coffee Table

A coffee table is a low table designed for use in a living room, in front of a sofa, used to support beverages, magazines, books, decorative objects, and other small items.

Informal Communication

The exchange of information, thoughts, or messages in an unofficial or casual manner within or outside an organization.