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How much will be available on jade 18th birthday

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Julie is going to establish a University Fund for her daughter Jade, who has just been born. She plans to make the first deposit of $5,000 today and make another 10 annual deposits of this amount. After this, annual deposits of $10,000 will be made until Jade's 18th birthday. Given the long term nature of the investment, Julie anticipates an 6% pa return. The money is the transferred to an account for Jade and she will then withdraw the money in equal annual amounts for 5 years starting on her 18th birthday. Jade will only be able to earn 3% pa on her money.

(i) How much will be available on Jade's 18th birthday, before the first withdrawal is made?

(ii) Schedule showing the cash inflows and outflows of this fund. How much will Jade be able to spend each year?

Reference no: EM132484732

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