You plan to save $8,000 each of the next 40 years, and invest that money in an account that pays 8% annual interest. In addition, you plan to pay for your child's college education beginning in fifteen years. You expect that education to cost $20,000 per year for four years. To pay for the education, you will simply withdrawal money from your investment account. In addition, a long-lost relative recently died, leaving you $50,000. A timeline depicting this situation follows.
|
Date
|
0
|
1-14
|
15-18
|
19-40
|
|
Deposits
|
$50,000
|
$8,000
|
$8,000
|
$8,000
|
|
Withdrawals
|
|
|
$20,000
|
|
How much money will you have just after you make your last deposit forty years from today?