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Jennifer and John want to save for collage for their kids. There are only 8 years...

Jennifer and John want to save for collage for their kids. There are only 8 years left until the oldest kid will go to the University, so the first deposit will be done immediately. There will be 8 deposits to the fund total. Parents want to accumulate $250,000. Compute the annual deposit Jennifer and John must make if the fund will earn 8% interest compounded annually.

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Answer #1

Solution:

Required annual deposit = Future value / Cumulative FV factor at 8% for 8 periods of annuity due

= $250,000 / 11.48756 = $21,763

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