Suppose it costs $15,000 per year (in early 2010 dollars) for tuition, room, boa
ID: 1245312 • Letter: S
Question
Suppose it costs $15,000 per year (in early 2010 dollars) for tuition, room, board, and living expenses to attend a public university in the Southeastern United States. a. If inflation averages 6% per year, what is the total cost of a four-year college education starting in 2020 (i.e., 10 years from now)? b. Starting in January of 2010, what monthly savings amount must be put aside to pay for this four-year college education? The monthly payment will be made up to the end of college education. Assume your savings account earns 6% per year, compounded monthly (0.5% per month).Explanation / Answer
in 2020 15000*(1.06)^10 ........ hence for 4 yr clg will take 15000*(1.06)^10 +15000*(1.06)^11 +15000*(1.06)^12 +15000*(1.06)^13 =117514.06 ...../ b)x be the mnthly savings.. total 14 yrs hence 14*12 =168 mnths X*(1+1.005+1.005^2+1.005^3....+1.005^168) =117514.06 hence find X