The parents of a newborn have decided to make deposits into an investment account on each of their son's birthdays, starting on his first birthday. The parents will deposit $2,500 on their son's first birthday and plan to increase the size of their deposits by 7% every year. The account is expected to earn an interest rate of 5% p.a and the last deposit will be made their son's 18th birthday. The present value of this investment plan is closest to: $125,000 $50,554. $70,331. $121,664.

The parents of a newborn have decided to make deposits into an investment account on each of their son's birthdays, starting on his first birthday. The parents will deposit $2,500 on their son's first birthday and plan to increase the size of their deposits by 7% every year. The account is expected to earn an interest rate of 5% p.a and the last deposit will be made their son's 18th birthday. The present value of this investment plan is closest to: $125,000 $50,554. $70,331. $121,664.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 13E

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