# 124 aunt darla has agreed to deposit a lump sum into an account that pays 12 interes 4313507

 124.Aunt Darla has agreed to deposit a lump sum into an account that pays 12% interest compounded annually in order to pay for her niece's college education. The niece estimated that she will need to withdraw \$40,000 at the beginning of each year for four years to pay for room, board, tuition, and books. Aunt Darla will deposit the lump sum on August 1, 2016, and the niece will make the first withdrawal on August 1, 2022. ? Required: ? Determine the amount that Aunt Darla must deposit. Clearly label all work.
 125.The FASB concepts statement relating to cash flow information introduces the concept of expected cash flows when using present values for accounting measurements. Assume that Smith Company determined that it has a 40% probability of receiving \$10,000 one year from now and a 60% probability of receiving \$10,000 two years from now. ? Required: ? Using the FASB concepts, calculate the present value of the expected cash flows assuming a 12% interest rate compounded annually.
 126.Mathias Company estimated that it has a 20% probability of receiving \$240,000 one year from now, a 30% probability of receiving \$240,000 two years from now, and a 50% probability of receiving \$240,000 three years from now. ? Required: ? Using the FASB's concept of “expected cash flows,” calculate the present value of the expected cash flows assuming a 10% interest rate compounded annually.