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Tuition costs are expected to inflate at the rate of 6% per year. The first year's...

Tuition costs are expected to inflate at the rate of 6% per year. The first year's tuition is due FIVE years from now and will be $4,000. A fund is to be set up today to cover tuition costs for 4 years in an account that will earn interest at the rate of 8% per year, compounded annually. How large must the fund be?

P = $_____

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Answer #1

How large must the fund be

=4000/(1+8%)^5+(4000*(1+6%)^1)/(1+8%)^6+(4000*(1+6%)^2)/(1+8%)^7+(4000*(1+6%)^3)/(1+8%)^8

=10590.57

the above is answer..

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