Question
Today is your childs first birthday. You anticipate that when your child attends college, the full cost of tuition for their freshman year will be
Today is your childs first birthday. You anticipate that when your child attends college, the
full cost of tuition for their freshman year will be $75,000 and that this cost will increase by
4% per year for each following year. You would like to begin saving money today, and each
birthday up to and including your childs 18th birthday, to fund your childs education. If the
account in which you will be saving earns interest at a rate of 8%, compounded annually, what
amount must be deposited each year (equal deposits), starting today, such that the balance on
the account is sufficient to cover four years of college tuition expenses. Tuition for your childs
freshman year will be due on their 19th birthday.
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