Indiana University has just revealed an innovative college education-financing plan for new parents at the baby's...

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Indiana University has just revealed an innovative college education-financing plan for new parents at the baby's birth (0 years old in this example). The plan allows parents to make a lump-sum contribution of $9,000 now to cover 4 years of equal tuition payments starting 18 years from now (i.e., the first payment will be made at the end of the year when your kid is 18 years old). If the plan assumes an annual interest rate of 10%, what annual tuition does this plan imply? Assume the tuition remains the same over the 4-year period. Indiana University has just revealed an innovative college education-financing plan for new parents at the baby's birth (0 years old in this example). The plan allows parents to make a lump-sum contribution of $9,000 now to cover 4 years of equal tuition payments starting 18 years from now (i.e., the first payment will be made at the end of the year when your kid is 18 years old). If the plan assumes an annual interest rate of 10%, what annual tuition does this plan imply? Assume the tuition remains the same over the 4-year period.

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The lumpsum payment of 9000 will grow at an annual interes... View the full answer