A financial planning service offers a college savings program. The plan calls fo

Question

A financial planning service offers a college savings program. The plan calls for you to make six annual payments of $14,300 each, with the first payment occurring today, your child’s 12th birthday. Beginning on your child’s 18th birthday, the plan will provide $32,000 per year for four years.

A financial planning service offers a college savings program. The plan calls for you to make six annual payments of $14,300 each, with the first payment occurring today, your child’s 12th birthday. Beginning on your child’s 18th birthday, the plan will provide $32,000 per year for four years.

Explanation / Answer

Let r be the rate
0=-14300-14300/(1+r)-14300/(1+r)^2-14300/(1+r)^3-14300/(1+r)^4-14300/(1+r)^5+32000/(1+r)^6+32000/(1+r)^7+32000/(1+r)^8+32000/(1+r)^9

=>r=8.21672921727154%

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