Question

You are saving for the college education of your child. You estimate your child's college expenses to be $30,000 per year and payable at the beginning of each academic year. The annual interest rate is 5% and it is not expected to change. You will also have to pay $17,000 at the end of year 3 and $1,000 at the end of year 4.

At the point your child is about to start college, what is the present value of the child's education?

Answer #1

**Calculation of
Present Value**

Present Value = Cash Flows / (100+5%)^Years

**Amount in
$**

Therefore, the **present value of child's
college education at the time of start of college is
$127,205.38**

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