You plan to save $7,000 each of the next 40 years, and invest that money in an account that pays 9%

You plan to save $7,000 each of the next 40 years, and invest that money in an account that pays 9% annual interest. In addition, you plan to pay for your child’s college education beginning in 20 years. You expect that education to cost $30,000 per year for four years. To pay for the education, you will simply withdrawal money from your investment account. In addition, you currently have an outstanding loan with a balance of $15,000 and an annual interest rate of 9%. You plan to pay off that loan over the next few years. A timeline depicting this situation follows.


Date                                   0            1-19          20-23             24-40

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Deposits                                       $7,000          $7,000             $7,000
Withdrawals                                                        $30,000   
Loan Balance              $15,000

a) How much money will you have just after you make your last deposit forty years from today?

b) [2 pts] How much money will you have 5 years later (year 45) if you make no additional deposits or withdrawals?