How much must the grandfather put into ed trust

Assignment Help Finance Basics

Reference no: EM13299144

Steve and Ed are cousins who were both born on the same day, and both turned 25 today. Thier grandfather began putting $2,500 per year into a trust fund for Steve on his 20th birthday, and he just made a 6th payment into the fund. The grandfather(or his estate's trustee) will make 40 more $2,500 payments until 46th and final payment is made on Steve's 65th birthday. The grandfather set things up this way because he wants Steve to work, not be a "trust fund baby" but he also wants to ensure that Steve is provided for in his old age.

Until now, the grandfather has been disappointed with Ed, hence has not given him anything. However, they recently reconciled, and the grandfather decided to make an equivalent provision for Ed. He will make the first payment to a trust for Ed today, and he has instructed his trustee to make 40 additional equal annual payments until Ed turns 65, when the 41st and final payment will be made. If both trusts earn an annual return of 8%, how much must the grandfather put into Ed's trust today and each subsequent year to enable him to have the same retirement nest egg as Steve after the last payment is made on their 65th birthday?

Reference no: EM13299144

Questions Cloud

Straight-line method of depreciation : Depreciation is computed for the exact period of time during which the asset is owned and depreciation is computed for the full year on the January 1 balance in the asset account.

Find what is the angle that is formed by the crane boom : A crane is placed along the easterly sideline of a building, but 25 feet from the front of the building. The building to be erected is a 6 story building that is 100 feet wide by 50feet deep. YOu may assume that each story is 15 feet.

Karleen goerke : Write an initial substantive response of 50 words in length. Begin your response with a restatement of the question/prompt, and include in-text citation(s) and a reference for each scholarly source used according to the APA guidelines found in the AP..

What cash flow must the investment provide : Your regard 8% as an appropriate rate of return on a low risk but illiquid 7 year loan. What cash flow must the investment provide at the end of each of the final 4 years, that is, what is X?

How much must the grandfather put into ed trust : how much must the grandfather put into Ed's trust today and each subsequent year to enable him to have the same retirement nest egg as Steve after the last payment is made on their 65th birthday?

Find where is the final image relative to second lens formed : Two converging lenses, each of focal length 14.5 cm, are placed 59.2 cm apart, and an object is placed 27.4 cm in front of the first. Where is the final image relative to the second lens formed

How to design the curve of the roadway at station : An equal tangent vertical curve is to be constructed between grades of -3.0% (initial) and 1.0% (final). The PVI is at station 110+00 and elevation 420 ft. Due to a street crossing the roadway, the elevation of the roadway at station 112+00 must b..

State the initial temperature of the ethylene glycol : A 23.7-g sample of ethylene glycol, a car radiator coolant, loses 906 J of heat. What was the initial temperature of the ethylene glycol if the final temperature is 32.5 degrees Celsius (c of ethylene glycol=2.42 J/g*K)

Sustainable development report l oreal : Here is the link of the document: PLease click on Sustainable Development Report which is the 3rd document only on the bottom right hand side (50 pages).http://www.loreal-finance.com/eng/annual-report By relying on the 2013 Sustainable Development Re..

User Account

All Pages