Suppose you get a student loan for $10,000, and your payments are deferred until after you graduate, 3 years from now. Then, you will make 15 yearly payments (starting 3 years from now).
What are your payments? The interest rate is 8%/year. Suppose you make an annual contribution of $200 each year to a college education fund for a niece.
She is 4 years old now, and you will start next year and make the last deposit when she is 18. The fund is a money market account earning 7% year.
What will it be worth immediately after the last deposit?