First, find the effective annual rate of return.
Now, find the value of 4 payments of 20000, paid in advance
Now, these payments start on the 18th birthday. their value at birth is
Parents want to invest a sum of money at the birth of a child so that when the child becomes 18 years of age, the child will receive $20,000 per year toward college expenses in four yearly installments. If the nominal rate of return per year is 6%, and interest is compounded semi-annually, how much should the original investment be?