Pete Morton is planning to go to graduate school in a program of study that will take three years. Pete wants to have $8,000 available each year for various school and living expenses. Use Exhibit 1-D. If he earns 3 percent on his money, how much must he deposit at the start of his studies to be able to withdraw $8,000 a year for three? (Round PVA factor to 3 decimal places and final answer to the nearest whole dollar.)

Respuesta :

Answer:

He must deposit $22,200

Step-by-step explanation:

Since he wants to have $8,000 at the end of the year. Therefore,

PV = PMT × PV annuity table factor

= $8,000 × 2.775(present value of a series)

= $22,200(exhibit 1-D)