Determine the equal amount this couple

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Suppose a young couple with an 8-year old son attempt to save for their son’s college expenses in advance. Assuming that he enters college 10 years from the present, they estimate that an amount of $12,000 per year in terms of today’s dollars will be required to support his college expenses for 4 years. It is also estimated that the future rate of inflation will be 4% per year, and they can invest their savings at 10% compounded annually. Determine the equal amount this couple must save each year until they send their son to college. College payments are made at the start of the school year.

Reference no: EM13770235

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