Planning to deposit constant fraction

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Reference no: EM131835322

Child will begin college in exactly 18 years. The yearly tuition at the scool is currently 30,000 per year. This cost is expected to increase 4% each year for the next 22 years, including the cost for the final 5th year of the degree program. Fathers after tax earnings will be 60,000 during the coming year and expected to increase at 3.5% each year over the next 22 years. Father is planning to deposit a CONSTANT FRACTION of his yearly after-tax income in an account starting in 1 year. He will continue to make growing yearly contributions till the beginning fo the final 5th year of school. The account is expected to have a yearly return of 8.6%. Assuming tuition is due at the start of each year, determine the percent of his yearly income he must save each year.

Reference no: EM131835322

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