Your sister wants to attend university.She is 13 years old and expects to begin university the year she turns 18.If university tuition is currently $10,000 annually,and inflation is 3%,what is the expected tuition cost of your sister's first year?

Question

Quizplus · Accepted Answer

To calculate the expected tuition cost of your sister's first year, we need to calculate the inflation-adjusted tuition cost for five years from now.

We will use the formula:

Future value = Present value x (1 + inflation rate) ^ number of years

Therefore, the future value of tuition after five years is:

Future value = $10,000 x (1 + 0.03) ^ 5 = $11,593.10

Therefore, the answer is choice A, $11,593.

Your Sister Wants to Attend University