From the time Jane and John’s daughter was born, they decided to
save for her university education. Jane and John assume their
daughter will require $1000 per month for her four years of study,
payments being made at the beginning of each month. If Jane and
John save for 18 years, calculate the amount they must save at the
beginning of each month. Assume 6% p.a. interest is compounded
monthly. Hint: there are two annuities here, calculate the lump sum
required to fund the $1000 p.m. allowance first, then the monthly
amount the parents must save.
Get Answers For Free
Most questions answered within 1 hours.