You anticipate having to pay $30,000 per year for your child’s college education starting 10 years from...

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Finance

You anticipate havingto pay $30,000 per year for your child’s college education starting10 years from now. You plan to finance four years of college bymaking quarterly deposits in a savings account starting now. Thefinal deposit is made three months prior to the first collegepayment, for a total of 40 deposits. Each annual college payment ismade in full at the beginning of the school year.
If the savings accountearns 8% per annum convertible quarterly, what should yourquarterly deposit be?
Less than $1,700
At least $1,700, butless than $1,710
At least $1,710, butless than $1,720
At least $1,720, butless than $1,730
$1,730 or more

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4.0 Ratings (512 Votes)

The correct answer is last option showing 1730 or more Lets shift ourselves to the end of t 10 years R Effective annual discount rate 1 8 24 1 1024 1 824 At this See Answer

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You anticipate havingto pay $30,000 per year for your child’s college education starting10 years from now. You plan to finance four years of college bymaking quarterly deposits in a savings account starting now. Thefinal deposit is made three months prior to the first collegepayment, for a total of 40 deposits. Each annual college payment ismade in full at the beginning of the school year.If the savings accountearns 8% per annum convertible quarterly, what should yourquarterly deposit be?Less than $1,700At least $1,700, butless than $1,710At least $1,710, butless than $1,720At least $1,720, butless than $1,730$1,730 or more