The couple is expecting a child shortly and wish to make plans to cover their childs overseas education in 18 years time. Current fees are $7000 per annum and they assume these will rise at 5% per annum. The following table shows the amount of tuition fees for four years from Year 18 to Year 21.

Year 18: $16,846 Year 19: $17,689 Year 20: $18,573 Year 21: $19,502

The couple assumes their investments will earn 6% each year. Demonstrate your understanding of Time Value of Money, by analysing how much money they should contribute now if they plan to make equal payments starting next year for 17 years.