What is the equal amount in actual dollars

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A couple wants to save for their daughter’s college expense. The daughter will enter college 10 years from now and she will need $45,000, $46,000, $47,000 and $48,000 in actual dollars for 4 school years. Assume that these college payments will be made at the beginning of the school year. The future general inflation rate is estimated to be 5% per year and the annual inflation-free interest rate is 6%. What is the equal amount, in actual dollars, the couple must save each year until their daughter goes to college?

Reference no: EM13854769

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