For these problems, assume the correct discount rate is 10%. The following questions are based on this scenario:

You want to start a savings program for a college fund for your daughter. She is currently two years old (t=0) and will start college when she is 18 (t=16). Assume you are currently 30 years old.

• College education currently costs $90,000 per year at a private university like Northwestern, including room and board.
• You expect your daughter will attend college for four years.
• Assume the costs of a college education grow at a 10% rate per year.
• You want to save the same amount (in nominal terms, i.e., not adjusted for inflation)
• each year starting next year, and your savings program will end when you daughter is
• 17, at t=15.
• Assume that the market interest rate is 2%. You earn this interest on your savings.