Suppose that a young couple has just had their first baby and they wish to insure that enough money will be available to pay for their child's college education.
They decide to make deposits into an educational savings account on each of their daughter's birthdays, starting with her first birthday. Assume that the educational savings account will return a constant 7%.
The parents deposit $2000 on their daughter's first birthday and plan to increase the size of their deposits by 5% each year.
Draw a timeline that details the amount that would be available for the daughter's college expenses on her 18th birthday, and identify the amount she would have for college.