College expenses are incurred at the beginning of each


Joe and Sue want to save enough money for their daughter, who is 13 now, to go to college. She plans to begin 4 years of college when she turns 18. Currently, the cost per year for all college expenses is $12,500, but a 5 percent annual inflation rate is forecasted for these costs. The daughter has $7,500 (from her grandfather) in a savings account earning 8% compounded annually, and this will be used to help meet her college expenses. The rest of the costs will be met by money the parents will deposit into the same savings account. They will make 4 equal annual deposits to the account with the first deposit being made today, and the last one being made when she turns 16. College expenses are incurred at the beginning of each school year. Calculate the necessary size of the annual deposit. (please show process)

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: College expenses are incurred at the beginning of each
Reference No:- TGS0633814

Expected delivery within 24 Hours