How much will I need to set per month starting today to pay for 4 years of college if we assume the following.
-Tuition this year is $15,000
-General inflation is 2%
-The tuition inflation rate is expected to be 4%
-I will set aside the money in a money market account which is expected to earn 5%
-College will start in 10 years
-Tuition needs for each year is paid at the beginning of each year
-We only have 10 years to save and do not continue to contribute to the account once school starts
Pick the closest answer:
A. |
$500.00 |
|
B. |
$561.18 |
|
C. |
$563.52 |
|
D. |
$6,625.51 |
Correct answer: B. $561.18
Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -
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