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14 March, 17:56

g The parents of three children, ages 1, 3, and 6, wish to set up a trust fund that will pay X to each child upon attainment of age 18, and Y to each child upon attainment of age 21. They will establish the trust fund with a single investment of Z. Find the equation of value for Z.

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  1. 14 March, 18:36
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    Z=X (v¹⁷+v¹⁵+v¹²) + Y (v²⁰+v¹⁸+v¹⁵)

    Step-by-step explanation:

    For the the first child of age 1 yea to be paid an investment of X at age 18 will be Xv¹⁷ and an investment of Y at age 21 will be Yv²⁰·

    also for then 3 years old child to be paid an investment of X at age 18 will be Xv¹⁵ and an investment of Y at age 21 will be Yv¹⁸

    lastly for the 6 years old child be paid an investment of X at age 18 will be Xv¹² and an investment of Y at age 21 will be Yv¹⁵·

    Hence the investment Z must be equal to the summation of all this values

    Z=X (v¹⁷+v¹⁵+v¹²) + Y (v²⁰+v¹⁸+v¹⁵)
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