Inflation, investment and costs

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Steven and Dawn wanted to know how much it would cost to send their daughter Dawson to a private college. They have saved $20,000 to date for the purpose. Dawson is six-years old and will be enrolling in a four-year college at age 18. Assume that the college inflation rate is 5%, investments returns are 6% after tax, and total college costs are $50,000 per year in today's dollars. Calculate the amount they would have to save each year to have full college costs funded by the beginning of college.

Reference no: EM1344252

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