a.Your brother is saving for his daughter (3yearold Monica) to start college in exactly 15 years (t=15) from today (t=0). A single year of college today (t=0) would cost him $25,000. If college costs increase at an annual rate of 3.5%, what will each year of college cost for the four years his daughter is in college (t=15 age 18, t=16 age 19, t=17 age 20, and t=18 age 21)?

b. University offers your brother the option of signing a contract to pay for all four years of college at once on the day Monica begins college (t=15 at her age of 18). What is the present value of all the college costs you calculated above (all 4 years) when Monica is 18 (t=15) if the University uses a 7% discount rate of return? Hint: Find the present value of college costs from #3 above ... you can't just add them up as they occur at different points in time on the timeline.