She is currently saving for her son's college education. The current cost of college is $10,000 a year. He expects college costs to continue to rise at a rate of 5 percent per year. Your child is scheduled to start attending a four-year college in 10 years (ie, college payments will be made at t=10, t=11, t=12, and t=13). You currently have $25,000 in an account that earns 6 percent after taxes. You would like to have all the savings needed by the time your child enters college, and you would like to contribute a constant amount at the beginning of each of the next 10 years to provide the amount needed. (You want to make 10 equal contributions starting in year 0 and ending in year 9.)

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To calculate the constant amount that needs to be contributed each year to cover the college costs w... View the full answer