Assume that you had a child and you are now planning for her collage education. You Would like to make 43 equal payments over the next 21 years (The first payment to be made immediately all other payment to be made at 6 month internals, with the final payment to be made at he 21st. birthday. So that you will be able to cover her expected expenses while in school. You expect to pay expenses on her 18th, 19th, 20th, 21th birthdays.
Assume that the current (time period 0) annual cost of college is $6,000.00 that you expect annual inflation to be 8% for the next 5 years, and then 5% thereafter. If you expected to be able to earn a return of 4 % every 6 month on your investments (a simple rate of 8% with semiannual compounding) what will be the amount of each of the 43 payments).