Share
Explore BrainMass

Annuity for a Future Value

Your two children go to college in the future. First goes to college in 10 years from now, and will require $20,000 each year for the four years of college. Second child goes to college 15 years from now, and will need $24,000 each year for the four years of college. You wish to make equal, end of year payments between now and the point where your first child goes to college, i.e. in 10 years. If the interest rate is assumed to be 10% per year for each of the next 20 years, what must your deposit each year be?

Solution Preview

Note: The abbreviations have the following meanings

PVIF= Present Value Interest Factor
PVIFA= Present Value Interest Factor for an Annuity

They can be read from tables or calculated using the following equations
PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%
PVIF( n, r%)= =1/(1+r%)^n

Your two children go to college in the future. First goes to college in 10 years from now, and will require $20,000 each year for the four years of college. Second child goes to college 15 years from now, and will need $24,000 each year for the ...

Solution Summary

This solution provides assistance calculating the annuity for a future value.

$2.19