James Robinson

James Robinson has decided that he would like to fund his granddaughter’s college education. He estimates that he will have to make four annual tuition payments, with the first one coming 18 years from now. The current level of tuition is $25,000. Mr. Robinson estimates that this will rise 4% per year (including the years that his daughter is in college). He will make 17 annual payments into a college savings plan that is expected to earn a 12% annual return. He plans to make his first payment one year from today, and he plans to increase his contributions at a rate of 5% per year. What is the amount of the first payment that Mr. Robinson must make in order to accomplish his goal?