Otto Is Planning for His Son's College Education to Begin

Multiple Choice

Otto is planning for his son's college education to begin ten years from today. He estimates the end-of-the-year tuition, books, and living expenses to be $10,000 per year for a four-year degree. How much must Otto deposit today, at an interest rate of 12 percent, for his son to be able to withdraw $10,000 per year for four years of college?

A) $12,880
B) $ 9,780
C) $40,000
D) $18,950