A couple wants to save for their daughter s college expense. The daughter will enter college 8 years from now and she will need$40,000, $41,000, $42,000 and $43,000 in actual dollars for 4 school years. Assume that these college payments will be made at the beginning of the school year. The future general in ation rate is estimated to be 6% per year and the annual in ation-free interest rate is 5%. What is the equal amount, in actual dollars, the couple mustsave each year until their daughter goes to college (for 8 years)?

A couple wants to save for their daughter s college expense. The daugh

1.	A couple wants to save for their daughter s college expense. The daughter will enter college 8 years from now and she will need$40,000, $41,000, $42,000 and $43,000 in actual dollars for 4 school years. Assume that these college payments will be made at the beginning of the school year. The future general in ation rate is estimated to be 6% per year and the annual in ation-free interest rate is 5%. What is the equal amount, in actual dollars, the couple mustsave each year until their daughter goes to college (for 8 years)?
A.	11945
B.	11838
C.	12538
D.	12142
Answer» C. 12538