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How much needs to be deposited to set up the annuity

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Reference no: EM131794134

A grandfather sets up a trust for his only grandchild. The trust consists of an annuity that will pay $5,000 monthly to the grandchild for 18 years. The annuity pays an annual return of 5% and makes the payments monthly at the end of the month. Return on the annuity is 5% annually. The payments to the grandchild are paid at the beginning of the month.

The annuity will have a value of $0 at the end of the 18 years. How much needs to be deposited to set up the annuity? Show your work

Reference no: EM131794134

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