1) If you wanted to save for your child's education and predict tuition to be $35,000 a year and project her or him to begin 14 years from today.

1) If you wanted to save for your child's education and predict tuition to be $35,000 a year and project her or him to begin 14 years from today. You also predict tuition inflation to be 3% for the next 5 years and then 0.25% a year thereafter. In addition, you want to stop saving the day college begins (14 years) and predict you can earn 6.89% (APR) compounded quarterly. Lastly, tuition payments are due at the start of every year. How much would you have to save every year in order to pay for 4 years of college?

2. Wait!!! Your spouse wants to send your child on a trip to Europe upon graduation (year 18) and expects it will cost $25,500. You now wish to make semi-annual payments instead of yearly payments and want to stop making payments in 11 years instead of 14 years. How much would you need to save semi-annually in order to save for the revised amount (tuition & trip)?

3. Upon reviewing your financial situation it appears you can save $5,150.00 every 6 months for the next 11 years. What effective annual rate of interest would you need to achieve in order to save for the stated goal (tuition & trip)?