College tuition has been rising at a rate of 7% per year. Currently the average

Question

College tuition has been rising at a rate of 7% per year. Currently the average tuition of a state college is $10,600 per year. Andrea's son Trevor will begin college in 9 years. Andrea's portfolio is making 2% annually. How much does Andrea need to have set aside today/now to pay for 4 years of college for Trevor? (Note: Tuition will continue to change annually and Andrea's portfolio balance will continue to accrue interest while Trevor is in school. Also, tuition is due at the beginning of each year.)

$68,804.21

$70,180.29

$69,611.76

$42,400.00

PLease show your work. Thanks!!!!

Explanation / Answer

Particulars Groth@7% PV@2% Tution fee on 9th Year=10600*(1.07^9) 19487.67 16306.41 10th Year 20851.8 17105.74 11th Year 22311.43 17944.26 12th Year 23873.23 18823.88 Total 70180.29 So, he has to set aside 70180

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