Your child was just born and you are planning for his/her college education. You anticipate the annual tuition to be $70,000 per year for the four years of college. You plan on making equal deposits on your child's birthday every year starting today, the day of your child's birth. No deposits will be made after starting college. The first tuition payment is due in exactly 18 years from today (the day your child turns 18 - no deposit is required, i.e. last deposit is on 17th birthday). Assume the annual expected return on your investments is 8% over this period.
Draw the time line and calculate the annual deposit.