Answer:
$5,200,000
Explanation:
Amount that grandparents must deposit today = Regular amount / Rate of interest
= $130,000 / 2.5%
=$130,000/0.025
= $ 5,200,000
Therefore the amount that grandparents must deposit today is $5,200,000
Answer:
If the trust fund earns an annual return of 2.5 percent, Your grandparents must deposit today $4,062,231
Explanation:
In order to calculate how much must your grandparents deposit today, first we would have to calculate according to the information given the Value of fund required at end of year 10.
Hence, Value of fund required at end of year 10 = $130,000 / 2.5% = =$5,200,000
Therefore, the Value of fund required today at 2.5% and N = 10 = $5,200,000 / (1 + 2.5%)^10
= $4,062,231
If the trust fund earns an annual return of 2.5 percent, Your grandparents must deposit today $4,062,231
