Determine the required amount to pay expenses

Reference no: EM1366476

You will require to pay for your son's private school tuition [1st grade through 12th grade] a sum of $8,000 per year for Years 1 through 6, $10,000 every year for years 7 through 12. Assume that all payments are made at the beginning of the year, that is, tuition for Year 1 is paid now. (i.e., at t=0), tuition for Year 2 is paid one year from now, and so on. In addition to the tuition payments you expect to incur graduation expensed of $2,500 at the end of Year 12. If a bank account can provide a certain 10 percent p.a. rate of return, how much money do you need to deposit today to be able to pay for the above expenses?

Reference no: EM1366476

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