CEE388 – Spring 2005
Homework Assignment #3
Due Date: Tuesday, February 1st, 2005
1. You are planning to buy a new sports utility vehicle (SUV) 6 years from now. You expect
the SUV to cost $42,000 at the time of the purchase. If you want to have half of the cost for
the down payment, how much must you save each year if you can earn 8% per year on your
savings?
2. Parents of a child wish to make equal yearly deposits in order to pay for their newborn
child’s education. They estimate that the educational cost will be $20,000 a year for 4 years,
beginning on the child’s 18th birthday. If the parents wish to make the first deposit on the
child’s first birthday and the last deposit on the child’s 17th birthday, how much must be
deposited annually at 5% interest?
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