Mr. Samer and his wife are saving for their university education. The daughter just turned 10, and she will be entering the university at the age of 18 years (8 years from today).
The university tuition and expense is currently $14,500 per year, but they are expected to increase at a rate of 3.5% per year. According
to university tuition policy, the tuition and other costs will be due at the beginning of each academic year.
Currently, Samer and his wife have accumulated $15,000 in their savings account and according to their long-run financial plan, they will
be adding $5,000 in each of the next 4 years. Then they plan to make 3 equal annual contributions in each of the following years. They
expect their investment account to earn 9%.
Based on the above information, answer the following questions:
• How much should Samer and his wife accumulate in their saving account to cover the university tuition and expense of the 4
years?
• How much must be the value of each of the annual payments (After the fourth year) to cover the anticipated university costs?