You have a 2 year old daughter. You anticipate that she will
18. You have a 2 year old daughter. You anticipate that she will attend college. The first annual tuition payment of $35,000 will be due 16 years from today. You expect that tuition payments will increase by 7% per year for the remaining 3 years of college (assume tuition is paid annually). You plan to save $4,000 per year until then. You will make your first deposit today, and your last deposit one year before the first tuition payment is due. Assume that the discount rate is 10% per year with annual compounding. Will you have saved enough to pay for college? If so, how much extra money will you have? If not, how much more will you need?
