Louise has been saving to pay for her daughter June's college education. June just turned 10...

 

Transcribed Image Text:

Louise has been saving to pay for her daughter June's college education. June just turned 10 at (t=0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $15,000 a year, but they are expected to increase at a rate of 4% a year. Louise needs to pay for June's tuition end of years 8, 9, 10, 11 Louise plans to make 7 end of year payments to cover these expenses. First payment will be made end of the first year and last payment end of year 7. In other words, Louise will make 7 annual payments end of years 1 to 7. Louise expects her investment account to earn 8%. How large must the annual payments at t = 1, 2, 3, 4, 5, 6, and 7 be to cover June's anticipated college costs? Louise has been saving to pay for her daughter June's college education. June just turned 10 at (t=0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $15,000 a year, but they are expected to increase at a rate of 4% a year. Louise needs to pay for June's tuition end of years 8, 9, 10, 11 Louise plans to make 7 end of year payments to cover these expenses. First payment will be made end of the first year and last payment end of year 7. In other words, Louise will make 7 annual payments end of years 1 to 7. Louise expects her investment account to earn 8%. How large must the annual payments at t = 1, 2, 3, 4, 5, 6, and 7 be to cover June's anticipated college costs?

Answer rating: 100% (QA)

Heres how to calculate the annual payments Louise needs to make Future Cost of College We need to fi... View the full answer