Solution: How much is the lump sum amount?

A parent on the day the child is born wishes to determine what lump sum would have to be paid into an account bearing interest at 5% compounded annually,

How much is the lump sum amount?

Problem Statement: ME Board April 1998

A parent on the day the child is born wishes to determine what lump sum would have to be paid into an account bearing interest at 5% compounded annually, in order to withdraw P20,000 each on the child’s 18th, 19th, 20th and 21st birthdays. How much is the lump sum amount?

  • A. P30,119.73
  • B. P30,941.73
  • C. P30,149.37
  • D. P30,419.73

Problem Answer:

The lump sum amount is P30,941.73.

Solution:

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