* A father is now planning a savings program to put his daughter through college. She just celebrated her 13th birthday, she plans to enroll at the university in 5 years when she turns 18 years old, and she should graduate in 4 years. Currently, the annual cost (for everything-food, clothing, tuition, books, transportation, and so forth) is $15,000, but these costs are expected to increase by 5% annually. The college requires that this amount be paid at the start of the school year. She now has $7,500 in a college savings account that pays 6% annually.

a.

How large must each payment be if the father makes five equal annual deposits into her account; the first deposit today and the fifth deposit on the daughter's17th birthday?

Hint:

1. Calculate the education cost (inflated at 5%) for each year of college.
2. Find Total Education liability at t = 5: calculate the total PV of yearly costs, discounted at 6%, as of the day she enters college.
3. Calculate the FV (at t = 5) of the initial savings of $7,500.
4. Funding Deficit (at t=5) = Total Education liability (t = 5)-FV of $7,500 savings (at t=5).
5. Future savings by father: Calculate deposit (PMT) per year such that the FVAdueof the 5-yearly deposit (PMT) = Funding Deficit (at t=5).

b.

Alternatively, another option is to finance the 4-year education costs with a 15-year education loan. First, they can borrow (education) funds needed at the beginning of each year at 10% p.a. nominal interest, compounded monthly. Second, they would need to repay the loan back with quarterly payments over 15 years with the 1stpayment due the 1stquarter after graduation. Compute the amount of the (end-of-period) quarterly payments needed to service the loan.

Hint

1. Find EAR on the loan.
2. Find Total Loan Outstanding (owing to bank) upon graduation (at t = 9)
3. Find effective quarterlyrpon loan, given monthly rm (monthly)= iN/ 12.
4. Using the quarterlyrp(in step 3), find the 60 quarterly repayments (PMT) needed to service the total outstanding loan (in step 2).

I need the solution only for the b part which is highlighted in bold. Thankyou!