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# Answer to Question #6197 in Finance for O Oliver

Question #6197
So far, John and Daphne have accumulated $15,000 in their college savings account (at t = 0). Their long-run financial plan is to add an additional$5,000 in each of the next 4 years (at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 9%. How large must the annual payments at t = 5, 6, and 7 be to cover Ellen's anticipated college costs?
1
2012-02-02T10:59:01-0500
At first we need to calculate, how much we will get after 4 year:
FV = ((((15000 + 5000)*1,09+5000)*1,09+5000)*1,09+5000)*1,09 = 46 097,3
Next we find& how large must& be the annual payments using annuity formula:
Where PV – present value
A – annual payments
r – interest rate
n - number of years
So,& annual payments must& be

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