How large must be your five original deposits be

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Reference no: EM13303160

You plan to make 5 equal annual deposits into an account paying 5% interest. The first deposit is to be made today. You want to turn the account over to your school and have enough money in the account such that they will be able to withdraw from the account 50,000 per year in perpetuity( first withdrawal to be made in 2025)

a. how large must be your five original deposits be?

b. Now suppose that you make only the first four deposits (using the value found in part a.) You skip the fifth deposit . But feel bad, you make a deposit in 2019, and a another deposit in 2020(both of theses deposits are also the size found in part a) how much will your school be able to withdrawal from the account in perpetuity if the college still wants to begin withdrawing the funds in the year 2025?

Reference no: EM13303160

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