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15 July, 18:38

Jack and Jill have just had their first child. If college is expected to cost $150 comma 000 per year in 18 years, how much should the couple begin depositing annually at the end of the next 18 years to accumulate enough funds to pay 1 year of tuition 18 years from now

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  1. 15 July, 18:56
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    The below is missing from the question:

    Assume that they can earn 6% annual rate of return on their investment.

    $4,853.48

    Explanation:

    The amount the couple should begin depositing can be determined using the pmt formula in excel as follows:

    =-pmt (rate, nper, pv, fv)

    rate is the 6% annual rate of return on their investment

    nper is 18 years

    pv is the present worth of the tuition fee which is unknown

    fv is the amount of tuition required 18 years from now

    =-pmt (6%,18,0,150000)

    =$4,853.48
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