For many years, college cost (including tuition, fees, room, and board) increases have been higher than the inflation rate, averaging 5% to 8% per year. According to the College Board’s Trends in College Pricing, the average total costs in 2015 dollars were $19,548 for students attending in-state 4-year public colleges and universities and $43,921 for students at 4-year private colleges and universities. Assume an additional $4000 per year for textbooks, supplies, transportation, and other expenses. Using a 7% per year inflation rate, (a) how much can a sophomore high-school student expect to spend on in-state tuition, fees, room, and board for the freshman year (3 years from now) at a 4-year public university, and (b) what is the estimated total cost for the second year at the university, if textbooks, supplies, etc. also increase at 7% per year?

For many years, college cost (including tuition, fees, room, and board) increases have been higher than the inflation rate, averaging 5% to 8% per year. According to the College Board’s Trends in College Pricing, the average total costs in 2015 dollars were $19,548 for students attending in-state 4-year public colleges and universities and $43,921 for students at 4-year private colleges and universities. Assume an additional $4000 per year for textbooks, supplies, transportation, and other expenses. Using a 7% per year inflation rate, (a) how much can a sophomore high-school student expect to spend on in-state tuition, fees, room, and board for the freshman year (3 years from now) at a 4-year public university, and (b) what is the estimated total cost for the second year at the university, if textbooks, supplies, etc. also increase at 7% per year?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 2.6IP

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