A grandmother is setting up a savings account to help fund her granddaughter"s college expenses. She is putting $40,000 in an account today that will earn 6% interest compounded annually. How much may Josey, the granddaughter, withdraw at the beginning of each of four years of college if her first withdrawal is to be one year from today and her last withdrawal is to exhaust the fund? The answer would be determined by which one of the following?
- $40,000 multiplied by the factor for the present value of an annuity of 1 where n = 4, i = 6%.
- $40,000 divided by the factor for the present value of an annuity of 1 where n = 4, i = 6%.
- $40,000 multiplied by the factor for the future amount of an annuity of 1 where n = 4, i = 6%.
- $40,000 divided by the factor for the future amount of an annuity of 1 where n = 4, i = 6%.