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What is the equal amount the couple must save each year

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Problem - A couple wants to save for their daughter's college expense. The daughter will enter college eight years from now, and she will need $50,000, $51,000, $52,000, and $53,000 in actual dollars over four school years. Assume that these college payments will be made at the beginning of each school year. The future general inflation rate is estimated to be 7% per year, and the annual inflation-free interest rate is 6%. What is the equal amount, in actual dollars, the couple must save each year until their daughter goes to college?

Reference no: EM133025833

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