Question

Bob and Brad are preparing for the collage education of their two children. The eldest child will start her University studies 6 years from today while the second will enter University 8 years from today. Bob and Brad estimate collage expenses to be $65,000 per year per child, payable at the beginning of each school year with each child spending 4 years in University.

1. Draw the timeline for this problem.

2. How much must they deposit each year if they begin to make their deposits one

   year from today with the last deposit made when the first child enters University. Assume

   that their deposits earn 10% each year.

3. How much must they deposit each year if they begin to make their deposits today

   with the last deposit made one year before the first child enters University. (2.5 marks)

4. How much must they deposit each year if they begin to make their deposits today

   with the last deposit made when the first child enters University. (2.5 marks)

Answer 1