A student wants to have $30,000 when he graduates 4 years from now. His grandfat
ID: 1767717 • Letter: A
Question
A student wants to have $30,000 when he graduates 4 years from now. His grandfather gave him a gift of $10,000. How much must he save each year (to the nearest dollar) if he deposits the $10,000 today and can earn 12% on both the $10,000 and his savings?
A student wants to have $30,000 when he graduates 4 years from now. His grandfather gave him a gift of $10,000. How much must he save each year (to the nearest dollar) if he deposits the $10,000 today and can earn 12% on both the $10,000 and his savings?Explanation / Answer
Future Value of Students requirement = $30,000
Number of years = 4 years
Present value of deposited amount = $10,000
Interest rate = 12%
Calculating each year savings amount (PMT):
(Using