Question

. Peter wants to save some money for his daughter Leah’s education. Tuition costs $16000 per...

. Peter wants to save some money for his daughter Leah’s education. Tuition costs $16000 per year in today’s dollars. His daughter was born today and will go to school starting at age 18. She will go to school for 4 years. Peter can earn 8% on his investments and tuition inflation is 5%. How much must Peter save at the end of each year, if he wants to make his last savings payment at the beginning of his daughter’s first year of college?

uneven cash flow steps

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Answer #1

Answer is as follows:

Therefore, monthly payment is $2831.08.

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