Question

Beginning three months from now, you want to be able to withdraw $2,700 each quarter from your bank account to cover college expenses over the next four years. If the account pays .67 percent interest per quarter, how m

Answer 1

PV= $40,835.6

Step-by-step explanation:

Giving the following information:

Quarterly withdrawal (A)= $2,700

Number of periods= 4*4= 16 quarters

Interest rate= 0.67% per quarter

To calculate the initial investment, we need to use the following formula:

PV= A*{(1/i) - 1/[i*(1 + i)^n]}

PV= 2,700*{(1/0.0067) - 1 / [0.0067*(1.0067)^16]

PV= $40,835.6