John and Mary have a four-year-old son. Annual public college tuition is $12,000 today. If costs increase at 4% per year, how much will college tuition be when John and Mary's son enters college in 14 years?

Question

Quizplus · Accepted Answer

The correct answer is A.The formula for compound interest is A = P(1 + r/n)^(nt), where A is the future value, P is the present value, r is the annual interest rate, n is the number of times per year that the interest is compounded, and t is the number of years.In this case, the present value is $12,000, the annual interest rate is 4%, the number of times per year that the interest is compounded is 1 (since the tuition increases once per year), and the number of years is 14.Plugging these values into the formula, we get:A = 12000(1 + 0.04/1)^(1*14)A = 12000(1.04)^14A = 20780.27Therefore, the college tuition will be $20,780 when John and Mary's son enters college in 14 years.

John and Mary Have a Four-Year-Old Son