Question: John’s Son Is About To Start Primary School In A Private School. At The Moment, The Tuition Is $20,000 Per Year, Payable At The Start Of The School Year (t=0). John Expects Tuition Costs To Increase, On Average By 5% Per Year Over The Next 13 Years (t=1 To T=13). This Means That His Private Education Has 14 Years, And The Last Payment Of Tuition Fee …

John’s son is about to start primary school in a private school.
At the moment, the tuition is $20,000 per year, payable at the
start of the school year (t=0). John expects tuition costs to
increase, on average by 5% per year over the next 13 years (t=1 to
t=13). This means that his private education has 14 years, and the
last payment of tuition fee is due at the beginning of year 14
(t=13). John has a saving’s account which is assigned to paying his
son tuition cost. How much money at least should the saving account
have today (t=0) so that the 14-year tuition cost can be fully paid
using money from the saving’s account only? Assume that John’s son
remains in this private school for the entire 14-year years of his
private education and that John’s current annual interest rate is
6%.