The average annual costs to support a child born today are estimated as follows:
The costs in the early years include child care expenses or foregone earnings of the care-giving parent.
a) What is the aggregate total cost (ignoring the time value of money) of raising a child to age 19?
b) What is the total economic value, at the date of birth of a child, of these future expenditures, allowing for a time value of money of 6% compounded monthly? Assume that the annual costs are paid in equal end-of-month amounts.
c) What will be the economic value at age 19 of the past expenditures, allowing for a time value of money of 6% compounded monthly?

Question

The average annual costs to support a child born today are estimated as follows:  
The costs in the early years include child care expenses or foregone earnings of the care-giving parent.
a) What is the aggregate total cost (ignoring the time value of money) of raising a child to age 19?
b) What is the total economic value, at the date of birth of a child, of these future expenditures, allowing for a time value of money of 6% compounded monthly? Assume that the annual costs are paid in equal end-of-month amounts.
c) What will be the economic value at age 19 of the past expenditures, allowing for a time value of money of 6% compounded monthly?

Quizplus · Accepted Answer

The Answer of The average annual costs to support a child born today are estimated as follows:  
The costs in the early years include child care expenses or foregone earnings of the care-giving parent.
a) What is the aggregate total cost (ignoring the time value of money) of raising a child to age 19?
b) What is the total economic value, at the date of birth of a child, of these future expenditures, allowing for a time value of money of 6% compounded monthly? Assume that the annual costs are paid in equal end-of-month amounts.
c) What will be the economic value at age 19 of the past expenditures, allowing for a time value of money of 6% compounded monthly?

The Average Annual Costs to Support a Child Born Today