You are saving for the college education of your two children. They are two years apart in age; one will begin college in 15 years, the other will begin in 17 years. Each plans to attend college for four consecutive years. You estimate your children’s college expenses to be $31,000 per year per child. The annual interest rate is 8% and it will remain 8% through the next 25 years. You will begin annual payments immediately and you will discontinue your payments when your oldest child enters college.
a. How much money do you need to have in your account when your oldest enters college?
b. How much money must you place in this account each year to fund this financial goal?
c. Graph the value of the account from year 0 to year 20 when the youngest child graduates. Again, make sure the graph, axes and lines are clearly labeled.