You prepare yourself for the high costs of college tuition for your daughter. You expect her to start college in 18 years (t=18) and expect her to be in college for 4 years. Todays tuition is $28,000 per year and tuition has increased historically at 6% per year and is expected to continue to grow at the same rate in the future.

You want to make an initial deposit of $15,000 in a savings account, which is guaranteed to return 1.982% per year (APR) in interest, compounded monthly. Each year, until your daughter starts college you plan on depositing an equal amount that is precisely enough to make the tuition payments during the time your daughter attends college. Hence, your first deposit (not including the initial $15,000) takes place at t=1 and your final deposit takes place at t=17. Your first tuition payment occurs in t=18.

Q1: If you could write one single check to payoff all the tuition at the time your daughter starts college (t=18), what is the correct amount for this check?

a. $89,620.40

b. $349,625.86

c. $315,035.71

d. $112,000.00

e. $332,340.69

- Please show steps/formulas if possible so I can be able to work this out on my own. Thank you!