14. Plan : This is a deferred annuity . The cash flow timeline is ." 1 ... 17 IB ... 21 U ... lol, CHI` .. Calculate the value of the annuity in year 17 , one period before it starts using $9. 4.5 and then discount that value back to the present using $9. 4 . 2. The value of the annuity in year 17 , one period before it is to start is ! PV = - CF\\\\ 1 I ( 1 + rj* Q.OB [ 1 .0187^ = 331, 212. 68 To get it's value today , we need to discount that lump sum amount back 17 years to the present* 3.31, 212.08 [I. ORY'T - = $89. 516.50 Evaluate : Even though the cash flows are a little unusual (an annuity starting well into the future ] , we can still value them by combining the FV of annuity and PV of a FV tool . If we invest $89. 515. 50 today at an interest rate of &''6 , it will grow to be enough to fund an annuity of $ 1041, 000 per year by the time it is needed for college expenses