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Richard and Sue wants to provide full funding for their 3 year old daughter who is...

Richard and Sue wants to provide full funding for their 3 year old daughter who is expected to start college when she is 18. The current annual cost of a 4 year college is $38,000 which is expected to increase by 3.5% per year. They expect to earn 5% on their investment. They have already saved $13,000 in a college fund for this purpose. Calculate the additional amount they should save by the end of every year in order to accumulate funding for 4 years of college when their daughter turns 18.

answer: 10, 298 show how?

Solutions

Expert Solution

Year Cost of college
1 63663.2556
2 65891.4695
3 68197.6709
4 70584.5894
Present value $249,247.96
This is the FV at year 18
FV of initial savings $27,026.07
Balance $222,221.89
Annual savings $10,298.27

WORKINGS

jeff jeffy answered 2 hours ago
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