Mini Case: Saving for College Your life is changing rapidly. You are still in your first semester at Haas, and you have met some very nice people. But there are big changes on the horizon – your significant other is pregnant and the baby is due around the first week of July, 2009! Of course your little pride-and-joy is going to be cute AND smart. After much consultation, your significant other and you have decided that you want to send the little one to a private college (when the time comes). Private colleges are very expensive. A recent survey estimates the current cost to be around $37,820 for one year. This costs covers tuition, fees, room, and board, and is based on an elite, private, four-year school in the Northeast of the United States. The cost is for the 2008-2009 school year. You expect these costs to increase by 3.9% per year over the foreseeable future (approximately the same rate as inflation.) Your child will most likely begin school eighteen (18) years after birth. Schools tend to demand
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Economics terminology, Real versus nominal value, nominal dollars