Joseph will start school on 9/1/14. He is expected to attend school for four years and will need...

The answer is E. $153,156

Given information:

• Annual payment = $50,000
• N2 = 4
• N1 = 4
• I = 5%

Determine the initial deposit:

{eq}Initial\:deposit = \displaystyle PMT\times\frac{1-(1 + I)^{-N2}}{I}\times (1 + I)\times\frac{1}{(1 + I)^{N1}} {/eq}

{eq}Initial\:deposit = \displaystyle $50,000\times\frac{1-(1 + 5\%)^{-4}}{5\%}\times (1 + 5\%)\times\frac{1}{(1 + 5\%)^{4}} {/eq}

{eq}Initial\:deposit = $153,156 {/eq}