Your daughter is 8 years old today. You are worried about paying for her college tuition, which you estimate will be $20,000 per year (after scholarships). You decide to start a college savings fund by depositing an equal amount in the bank at the end of each of the next 10 years. At the end of years 11, 12, 13 and 14, you want to withdraw $20,000 in order to pay for the tuition. An interest rate of 8% APR compounded annually is assumed. How much do you have to deposit at the end of each of the next 10 years in order to pay for the tuition costs?
Your daughter is 8 years old today. You are worried about paying for her college tuition, which you estimate will be $20,000 per year (after scholarships). You decide to start a college savings fund by depositing an equal amount in the bank at the end of each of the next 10 years. At the end of years 11, 12, 13 and 14, you want to withdraw $20,000 in order to pay for the tuition. An interest rate of 8% APR compounded annually is assumed. How much do you have to deposit at the end of each of the next 10 years in order to pay for the tuition costs?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money
Section: Chapter Questions
Problem 9.18E
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Your daughter is 8 years old today. You are worried about paying for her college tuition, which you estimate will be $20,000 per year (after scholarships). You decide to start a college savings fund by depositing an equal amount in the bank at the end of each of the next 10 years. At the end of years 11, 12, 13 and 14, you want to withdraw $20,000 in order to pay for the tuition. An interest rate of 8% APR compounded annually is assumed. How much do you have to deposit at the end of each of the next 10 years in order to pay for the tuition costs?
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