A family is interested in saving money for their child's education.

Today is their child's 11th birthday.

Their child will enter college seven years from now on their 18th birthday, and will attend for four years.

All college costs are due at the beginning of the year, so they will have to make payments

on their child's 18th, 19th, 20th and 21st birthdays (t = 7, 8, 9, 10).

They estimate that the college their child attends will cost $6,500 the first year (t = 7)

AND that the costs will increase 12 percent (12.0000%) EACH year (the final college payment will be made 10 years from now).

Determine the total needed to cover the four tuition payments (USE cash flow register, look closely at the Timing, and solve for NPV)

Currently, the family has $11,000.00 in an investment account to get started

They also plan to contribute a fixed amount at the END of each of the next seven years (t = 1, 2, 3, ... 7)

All their invested money will be in an account which pays 5 percent (5.0000%) interest compounded annually.

DRAW the TIMELINE and enter all information given BEFORE starting your calculations

Show ALL work on your scratch paper

Enter the $ amount the family will need to contribute to the account in each of the next seven years on the quiz worksheet