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

question 42

Essay

Aunt Darla has agreed to deposit a lump sum into an account that pays 12% interest compounded annually in order to pay for her niece's college education. The niece 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. Aunt Darla will deposit the lump sum on August 1, 2014, and the niece will make the first withdrawal on August 1, 2020.
Required:
Determine the amount that Aunt Darla must deposit. Clearly label all work.

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Definitions:

Constitution

is a set of fundamental principles or established precedents according to which a state or other organization is governed.

Education And Law Enforcement

The interplay between educational systems and law enforcement agencies, focusing on how education policies impact crime rates and vice versa.

African Slave Trade

The forced transportation of Africans to the Americas for the purpose of enslavement, occurring mainly from the 16th to the 19th centuries, a major part of the transatlantic slave trade.

Congress

The national legislative body of the United States, consisting of the Senate and the House of Representatives, responsible for making laws.