You are saving for the college education of your two children. They are two years apart...

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You are saving for the college education of your two children.They are two years apart in age; one will begin college 14 yearsfrom today and the other will begin 16 years from today. Youestimate your children’s college expenses to be $38,000 per yearper child, payable at the beginning of each school year. Theappropriate interest rate is 6.8 percent. Your deposits begin oneyear from today. You will make your last deposit when your oldestchild enters college. Assume four years of college for each child.How much money must you deposit in an account each year to fundyour children’s education?

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3.6 Ratings (599 Votes)

Present value of college expenses need to be computed first Here n 4 IY 68 and PMT 38000 Thus PV 12929732 I have solved the PV using the PV function in excel and the syntax PV 68 4 See Answer

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You are saving for the college education of your two children.They are two years apart in age; one will begin college 14 yearsfrom today and the other will begin 16 years from today. Youestimate your children’s college expenses to be $38,000 per yearper child, payable at the beginning of each school year. Theappropriate interest rate is 6.8 percent. Your deposits begin oneyear from today. You will make your last deposit when your oldestchild enters college. Assume four years of college for each child.How much money must you deposit in an account each year to fundyour children’s education?