Answer:
The amount to be deposited now to provide for this trust is $119,392.16.
Step-by-step explanation:
This problem is based on ordinary annuity.
An ordinary annuity is a sequence of fixed payments made, every consecutive period, over a fixed interval.
The formula to compute ordinary annuity is:
[tex]OA=P[\frac{q^{n}-1}{q^{n}(q-1)}][/tex]
Here qⁿ is:
[tex]q^{n}=1+\frac{r}{Number\ of\ periods}=1+\frac{0.067}{4}=1.01675[/tex]
Compute the ordinary annuity as follows:
[tex]OA=P[\frac{q^{n}-1}{q^{n}(q-1)}]=2000\times\frac{(1.01675)^{16}-1}{(1.01675)^{16}[1.01675-1]}=2000\times\frac{0.30445}{0.0051}=119392.16[/tex]
Thus, the amount to be deposited now to provide for this trust is $119,392.16.
