Question

Mr. S. P. Johnson is creating a college fund for his daughter.  He plans to make 7-yearly payments of $10,000 each with the first payment deposited today on his daughter’s 6^th birthday (happy birthday!) Assuming his daughter will need three equal withdrawals from this account to pay for her law-school education beginning when she is twenty-two (i.e. 22, 23, 24), how much will she have on a yearly basis for her law school career?  Mr. Johnson expects to earn a constant 10% annual return for the time interval of this problem.

Answer 1

Formulas Used:-

Years to deposite	7
Amount of deposite	10000
Years for which saving remains Unused	9
Annual Return	0.1
Amount Accumulated till 21st year	=FV(B4,B1,-B2)*(1+B4)^B3
Years of Law school	3
Amount she will have on Yearly Basis	=PMT(B4,B6,-B5)

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