Donald Jackson invests $58,800 at 10% annual interest, leaving the money invested without withdrawing any of the interest for 10
1 answer:
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Answer and Explanation:
The computation is shown below:
a. For computing the number of money required at the end of four years first we need to find out the present value i.e to be shown in the attachment
Given that,
Future value = $0
Rate of interest = 7%
NPER = 4 years
PMT = $10,000
The formula is shown below:
= PV(Rate;NPER;PMT;FV;type)
So, after applying this, the present value is $33,872.11
Now the net nest egg is
= $120,000 - $33,000 - $33,872.11
= $53,127.89
Now the future value is
= Present value × (1 + interest rate)^number of years
= $53,127.89 × (1 + 0.07)^4
= $69,639.83
b. Now to find out the number of years required to stay in school we need to use the NPER formula i.e be to shown in the attachment
Given that,
Present value = $69,639.83
Future value = $0
Rate of interest = 7%
PMT = $24,060
The formula is shown below:
= NPER(Rate;PMT;-PV;FV;type)
The present value come in negative
So, after applying this, the answer would be 3.35 years
