Greg has a 10-year old daughter who will be entering college in 8 years. Greg es

Question

Greg has a 10-year old daughter who will be entering college in 8 years. Greg estimates college costs to be $16,000, $17,000, $18,000 and $19,000 payable at the beginning of each of his daughter's foure years in college. How much must Greg save each year (assume end of year payments) for each of the next 8 years to have neough savings to pay for his daughter's education? Assume Greg can earn 9% on his savings. Please show your work.

Please show all work if you are going to answer this question! Thank you.

Explanation / Answer

First find the present value of the payments at 18 years old. 16000+17000/(1.09)+18000/(1.09^2)+19000/(1.0963)==61,418.06. This must be the future value of his savings. Using a financial calculator... For the savings account, Present Value(today)=0,Future Value=61418.06 (from above), Interest=9, N=8... Calculate Payment== $5,569

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