6. In order to plan for their child’s college education two parents are trying to decide...

6. In order to plan for their child’s college education two parents are trying to decide on a savings goal. The parents would like to be able to provide $10,000 each year for four years to assist in paying for college expenses. If the parents are confident that their investments will grow at an effective annual interest rate of 5%:

(a) How much should the parents try to save before their child goes to college to completely cover these payments?

(b) If the parents have 10 years to accumulate these savings, design a savings plan(with level payments) which will allow them to meet this goal.

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Please note- It is assumed all payments are made at year end.

jeff jeffy answered 2 days ago

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