PROBLEM 2: To plan for your newborns education, you invest in a money market fund...
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PROBLEM 2: To plan for your newborns education, you invest in a money market fund and will make QUARTERLY donations until your child enters college in 18 years. (The donations will be at the END of the Quarter) The money market will pay 8% APR with quarterly compounding. Currently, tuition for college is about $35,000 per year. However, tuition usually grows at about 2.50% per year. You assume it will continue to follow this pattern until your child has graduated from college. How much will you need to save per quarter so that your child will have college paid for? (Assume: Tuition payments are made ONCE per year and at the BEGINNING of the year. The money remains invested until your child exits college)
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