John and Jane have been saving to pay for their daughter Macy's college education. Macy just turned 9 at (t-0), d she will be entering college 9 years from now (at t-9). College tuition and expenses are currently $20,000 a year, but they are expected to increase at a rate of 6% a year. Tuition and other costs will be due at the end of years 9, 10, 11 and 12. To fund the tuition, John and Jane plan to save $15,000 in their college savings account today (at t0). Additionally, they plan to save $5,000 in cach of the next 3 years (at t 1, 2, and 3). Then they plan to make S equal annual contributions in each of the following years, t4, 5, 6, 7 and 8. They expect their investment account to cam 10% How large must the annual payments at t-4, 5, 6, 7 and 8 be to cover Macy's anticipated college costa? $10,817.03
John and Jane have been saving to pay for their daughter Macy's college education. Macy just turned 9 at (t-0), d she will be entering college 9 years from now (at t-9). College tuition and expenses are currently $20,000 a year, but they are expected to increase at a rate of 6% a year. Tuition and other costs will be due at the end of years 9, 10, 11 and 12. To fund the tuition, John and Jane plan to save $15,000 in their college savings account today (at t0). Additionally, they plan to save $5,000 in cach of the next 3 years (at t 1, 2, and 3). Then they plan to make S equal annual contributions in each of the following years, t4, 5, 6, 7 and 8. They expect their investment account to cam 10% How large must the annual payments at t-4, 5, 6, 7 and 8 be to cover Macy's anticipated college costa? $10,817.03
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter27: Time Value Of Money (compound)
Section: Chapter Questions
Problem 6E
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