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You decided to start saving for your child's college tuition. Your child will start college in...

You decided to start saving for your child's college tuition. Your child will start college in 25 years. There will be 4 annual tuition payments of $30,000 each. The first payment will be 25 years from now. You will start saving one year from now and will put aside the same amount at the end of every year for 25 years. How much do you have to save every year to have enough to pay the tuition payments. Your savings rate is 5% per annum.

Select one:

a. $6,390.15

b. $3,901.27

c. $2,340.34

d. $3,450.45

e. $5,603.24

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Answer #1

PMT x (1-(1/(1+rn)))/r $111,697.44 30,000 x (1-(1/(1.0544)))/0.05 Value of payments 25 years from now- PMTFV((1+r)An-1)/r Ann

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