You are saving for the college education of your two children. They are two year
ID: 2655512 • Letter: Y
Question
You are saving for the college education of your two children. They are two years apart in age; one will begin college 16 years from today and the other will begin 18 years from today. You estimate your children’s college expenses to be $36,000 per year per child, payable at the beginning of each school year. The annual interest rate is 6.6 percent. Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college.
How much money must you deposit in an account each year to fund your children’s education? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
You are saving for the college education of your two children. They are two years apart in age; one will begin college 16 years from today and the other will begin 18 years from today. You estimate your children’s college expenses to be $36,000 per year per child, payable at the beginning of each school year. The annual interest rate is 6.6 percent. Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college.
Explanation / Answer
The first deposit will start from a year now which means that the oldest child will enter college 15 years from the first deposit and the last deposit will be in the 15th year. The first expense of college will be at the start of the 15th year of 36000. The second will be in the 16th year of 36000. The third will be of 72000 with the second child also entering college. Same will be for the fourth one. Now the oldest child has finished his/her college so now the expenses for the next year will be 36000 each year till the younger child completes his/her college. So the amount to be deposited each year so as to cater to the college expenses of both the child is $10119.76 per year.
Year Expenses Deposit Balance Interest Rate Interest Amount 1 0 10119.76 10119.76 6.60% 667.9042 2 0 10119.76 20907.42 6.60% 1379.89 3 0 10119.76 32407.07 6.60% 2138.867 4 0 10119.76 44665.7 6.60% 2947.936 5 0 10119.76 57733.4 6.60% 3810.404 6 0 10119.76 71663.56 6.60% 4729.795 7 0 10119.76 86513.12 6.60% 5709.866 8 0 10119.76 102342.7 6.60% 6754.621 9 0 10119.76 119217.1 6.60% 7868.33 10 0 10119.76 137205.2 6.60% 9055.544 11 0 10119.76 156380.5 6.60% 10321.11 12 0 10119.76 176821.4 6.60% 11670.21 13 0 10119.76 198611.4 6.60% 13108.35 14 0 10119.76 221839.5 6.60% 14641.41 15 36000 10119.76 210600.6 6.60% 13899.64 16 36000 0 188500.3 6.60% 12441.02 17 72000 0 128941.3 6.60% 8510.126 18 72000 0 65451.43 6.60% 4319.794 19 36000 0 33771.22 6.60% 2228.9 20 36000 0 0.119766 6.60% 0.007905Related Questions
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