E4-23 (Appendix 4A: Saving for a college education—future value) The Smithsons have a nine-year-old daughter named Emily, and they wish to provide for her college education. They estimate that it will cost $30,000 per year for four years when Emily enters college ten years from now. Assume that all investments can earn an 8 percent annual interest rate, and that the four annual payments will be made at the beginning of each year. REQUIRED:

a. How much would the Smithsons have to invest today to meet Emily’s college expenses?

b. How much would the Smithsons have to invest at the end of each year for nine years to meet Emily’s college expenses?

c. Answer questions

(a) and

(b) above, assuming a 6 percent annual interest rate.