You have an absolutely brilliant child who is six years old and will be attending a private college in twelve years. You know that a four -year college now costs at least $30,000 per year, including tuition, books, and room and board. The cost of sending a child to college has increased by 7 percent per year, and you believe this will be true for the next twelve years. How much will the annual tuition be when your child is eighteen?
A) $67,565.75
B) $66,320.44
C) $60,365.89
D) $45,000.00

Question

Quizplus · Accepted Answer

To calculate the future cost of college tuition, you can use the formula for compound interest: Future Value = Present Value * (1 + rate)^n, where n is the number of years. Here, the Present Value is $30,000, the rate is 7% or 0.07, and n is 12 years. Plugging these values into the formula gives: Future Value = $30,000 * (1 + 0.07)^12 ≈ $67,565.75.

You Have an Absolutely Brilliant Child Who Is Six Years