What is the PV of these expenses

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Reference no: EM131979481

A father wishes to make equal annual payments to a bank account earning a 5% interest rate to provide for his son's education. He estimates the educational expenses of his son to be as follows: starting in five years, $25,000 yearly for four years, and $40,000 yearly for two years thereafter. a. Draw the time line and show educational expenses on it. b. What is the PV of these expenses? c. If father wants to make 10 equal annual payments to the son’s educational account to finance his son’s educational costs, what should be the amount of each annual payment?

Reference no: EM131979481

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