A young couple's first child was born today. The parents wish to ensure that enough money will be available to pay for her college education. Currently, college tuition, books, fees, and other costs, average $50,000 per year. On average, tuition and other costs have historically increased at a rate of 4% per year.

a) Assuming that these costs continue to increase 4% per year, what are the projected costs of each year of college 18 years from now when the child enters college? Assume four years of college.

b) The parents are planning for 4 years of college education. College costs are paid at the beginning of each year. Assuming these costs continue to increase 4% per year and that savings are invested in an account paying 7% interest until the last year of college is paid, how much money needs to be available at age 18 to pay for all four years of her undergraduate education?

c) The parents intend to open an investment account by making an initial deposit today. After today, they will make annual deposits on their daughter's birthday up to and including her 18th birthday. They plan to have sufficient funds available by the time of her 18th birthday to fund the entire 4 years of college. If they plan to increase the amount of each deposit by 5% per year, what should be the amount of (today's) initial deposit? What will be the amount of the final deposit on her 18th birthday?