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Please Explain, thanks You want to start saving for your daughter's college education now. She will enter college at age 18 (when she turns 18,
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You want to start saving for your daughter's college education now. She will enter college at age 18 (when she turns 18, i.e. beginning of 18, end of 17) and will pay fees of $4,000 at the end of each of the four years (fees are paid at the end of 18, 19, 20, 21). You will start your savings by making a deposit in one year and at the end of every year until she begins college. If annual deposits of $2,458.79 (from today onward, at the end of each year) will allow you to reach your goal, how old is your daughter now? Assume you can earn 6% annual interest on your savings. (Hints: You will need to do this in 2 stages. The fees for the 4 years of college need to be discounted back to the time entering college, i.e. end of 17, beginning of 18 years old. Then you can determine the FV of the annual deposits, and calculate the number of payments needed. Ensure the sign of FV and PMT are different)Step by Step Solution
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