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    Time value of money

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    Keith Stone has 10-year old daughter, Kate, who will be entering college in 8 years. Keith estimate college costs to be $16,000 $17,000, $18,000 and $19,000 payable at the beginning of each of Kate's four years in college. He has $2,000 in his account and intends to leave it there for the next 8 years.

    How much more must Keith save each year (assume end of the year payments) for each of the next 8 years to have enough savings to pay for his daughter? Assume Keith can earn 9% on his savings.

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    https://brainmass.com/business/annuity/determining-time-value-money-example-problem-220868

    Solution Preview

    Keith Stone has 10-year old daughter, Kate, who will be entering college in 8 years. Keith estimate college costs to be $16,000 $17,000, $18,000 and $19,000 payable at the beginning of each of Kate's four years in college. He has $2,000 in his account and intends to leave it there for the next 8 years. How much more must Keith save each year (assume end of the year ...

    Solution Summary

    This solution calculates the value of an annuity (annual payment) for each of the next 8 years to have enough savings to pay for college.

    $2.19