Regarding the previous problem (you got married, had a baby, college in 19 years

Question

Regarding the previous problem (you got married, had a baby, college in 19 years). Today, college costs $20,000 per year. If tuition keeps rising by 6% per year, what will four years of college cost junior, in total? Answer to nearest dollar. (Note: the previous problem said: "You have gotten married and just had a baby (congrats!). Junior will go to college in 19 years. Today, college costs $20,000 per year. If tuition keeps rising by 6% per year, what will one year of college cost junior, when he/she attends in 19 years? Answer to nearest dollar." The answer to that problem was 60512.

Explanation / Answer

First step is to calculate ......... tuition cost of first year = 20000 * (1.06)19 = 60512

Second step ........ total for 4 years tuition cost = A * [ (1+r)n - 1 ] / r

= 60512 * [ (1.06)n - 1 ] / 0.06

= 264717

OR ........ for easy understanding

60512 + 60512 ( 1.06) + 60512 * (1.06)2 + 60512 * (1.06)3= 264717

Year CF Factor cost 1 60512 1 60512 2 60512 1.06 64142.72 3 60512 1.1236 67991.28 4 60512 1.191016 72070.76 Total 264716.8

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