Savings for Education Fund

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Question

A father, concerned about the rapidly rising cost of a college education, is planning a savings program to put his daughter through college. She is 10 years old, plans to enroll at the university 8 years from now, and should take 4 years to complete her education. Currently, the cost per year (for everything-food, clothing, tuition, books, transportation, and so forth) is $8,000, but a 10 percent annual inflation rate in these costs is forecasted. The father's bank account pays 12 percent interest rate, compounded annually. How much will the father have to save each year before the time his daughter starts college in order to put her through school? (Note: The first deposit occurs one year from today, and the last deposit occurs when his daughter attends college at the age of 18.) Jun 11 2013 01:39 AM

 

Solution ID:608797 | This paper was updated on 26-Nov-2015

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