View the step-by-step solution to:

Question

a. If one year of college costs 12500 now and costs are increasing at a rate of 4% per year, how much will one

year of college cost in 18 years?

b. If college costs continue to increase at 4% per year, and Anna's college savings are invested in an account that pays 7% interest, how much money will she need to have available at age 18 to pay for all four years of her undergraduate education?

Top Answer

a: 25322.71 Using the formula Future value = Present value*(1+rate)^n = 12500*(1+4%)^18 =25322.71... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question