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 more tuition will you have to pay per year when your child is eighteen?
A) $15,000.00
B) $30,365.89
C) $36,320.44
D) $37,565.75

Question

Quizplus · Accepted Answer

To find the future cost of college tuition per year, you can use the formula for future value in the context of increasing costs: Future Value = Present Value * (1 + rate)^n, where Present Value = $30,000, rate = 7% or 0.07, and n = 12 years. Calculating this gives: Future Value = $30,000 * (1 + 0.07)^12 ≈ $67,565.75. The increase per year is the future cost minus the current cost: $67,565.75 - $30,000 = $37,565.75.

You Have an Absolutely Brilliant Child Who Is Six Years