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A couple wishes to establish a college fund for their five year old child. The college...

A couple wishes to establish a college fund for their five year old child. The college fund will earn 8% interest (profit) compounded annually. Assuming the child enter college at age 18, the couple estimate that an amount of SAR30,000 per year, in term of today’s riyal, will be required to support the child’s college expenses for four years. College expenses are estimated to increase at an annual rate of 6%. Determine the equal annual deposit the couple must make until they send their child to college. Assume that the first deposit will be made at the end of first year and deposits will continue until the child reaches at age 17. The child will enter college at age of 18, and the annual college expense will be paid at the beginning of each college year. In other words, first withdrawal will be made when the child is 18.

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30,1/o.01 EV= -114.545-

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