You plan to establish a college education fund for your child. The current cost of college is $12,000 per year and you expect this to increase by 5% per year. You plan to deposit money into an account earning 10% per year at the end of each of the next 18 years. You will withdraw the amount required for college at the end of years 18-22. You want the deposit to be low initially and grow by the rate of your salary increase, which you estimate to be 3.5%. What will be the first deposit?How much will be in the account after 8 years?

You plan to establish a college education fund for your child. The current cost of college is $12,000 per year and you expect this to increase by 5% per year. You plan to deposit money into an account earning 10% per year at the end of each of the next 18 years. You will withdraw the amount required for college at the end of years 18-22. You want the deposit to be low initially and grow by the rate of your salary increase, which you estimate to be 3.5%. What will be the first deposit?How much will be in the account after 8 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 35P

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