Question

A couple wants to save for their​ daughter's college expense. The daughter will enter college eight years from​ now, and she will need$37,000 ​,$37,900​,​ $38,800​,and ​$39,700

in actual dollars for 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 market interest rate to use in the​ analysis? The market interest rate is %.

​(Round to two decimal​ places.)

​(b) What is the equal​ amount, in actual

dollars​, the couple must save each year until their daughter goes to​ college?

The equal​ amount, in actual

dollars​,

the couple must save each year until their daughter goes to​ college, is

​$nothing.

​(Round to the nearest​ dollar.)

Answer 1

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