Imagine that you are a professional personal financial planner. One of your clients asks you the following two questions. Use the time value of money techniques to develop appropriate responses to each question.
a. I need to save $37,000 over the next fifteen years to fund my three-year-old daughter's college education. If I make equal annual end-of-year deposits into an account that earns 7 percent annual interest, how large must this deposit be?
b. I borrowed $75,000, am required to repay it in six equal (annual) end-ofyear installments of $3,344, and want to know what interest rate I am paying.