Scott and Sonya have been saving to pay for their daughter Casie's college education. Casie just turned 10 at (t = 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $14,000 a year, but they are expected to increase at a rate of 3% a year. Casie should graduate in 4 years - if she takes longer or wants to go to graduate school, she will be on her own. Tuition and other costs will be due at the beginning of each school year (at t = 8, 9, 10, and 11).

So far, Scott and Sonya have accumulated $12,000 in their college savings account (at t = 0). Their long-run financial plan is to make eight equal annual contributions in each of the following years, t =1, ... , and 8. They expect their investment account to earn 9%. How large must the annual payments be to cover Casie's anticipated college costs?