Savings plan for their child education

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Reference no: EM131859978

A couple decides on the following savings plan for their child's education. When the child is 6 month old, and every 6 months thereafter, they will deposit $300 dollars into a savings account that pays 9.5% interest compounded semi-annually. However, after the childs 10th birthday, having made 20 such payments, they will stop making deposits and let the accumulated balance earn compund interest at the same rate for the next 8 years, until the child is 18 years old.

How much will the couple have in the savings account when the chils is ready for college at 18 years old? Round your answers to the nearest cent.

Note that the problem has two steps. The first step is to calculate the annuity, and the second step is just compound interest.

Reference no: EM131859978

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