Question 1131686: Anthony decides to help his new niece attend a private college in 18 years. The projected cost of tuition, fees, and room and board when she starts amounts to $65,000 per year. How much should Anthony invest each year for the next 18 years to pay for the first-year costs? Assume 4.5% interest compounded annually. (Round your final answer to two decimal places.)
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Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the projected cost of tuition, fees, and room and board when she starts amounts to 65,000 each year.
the investment period is 18 years.
the 65,000 is the future value at the end of the investment period.
at 4.5% interest each year, the payments made at the end of each year of the investment period will need to be $2420.40.
the financial calculator i used is the TI-BA-II.
the inputs were:
present value = 0
future value = 65000
interest rate per year = 4.5%
numbe of years = 18.
payments are made at the end of each year.
i then had the calculator provide me with the payment required at the end of each year.
the calculator told me the payments required at the end of each year would be 2420.39834.
that equals 2420.40 when rounded to two decimal places.
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