Problem $1$

You have two $8-$years old twin children, and you anticipate that when they will

turn $18($exactly $10$ years from now$)$ they will need $$500,000$ to cover living and

tuition college expenses. Suppose that the discount rate is $10\%.$

If you want to meet this negative cash flow only with current savings, how

much would you need to set aside right now?

Suppose, instead, that want to meet this negative cash flow only saving a

constant amount at the end of each year, for the next $10$ years. What is

the amount you should set aside each year?