The average annual cost of college at 4-year private colleges was $30,094 in the 2013–2014 academic year. This was a 3.8% increase from the previous year. (a) If the cost of college increases by 3.8% each year, what will be the average cost of college at a 4-year private college for the 2033–2034 academic year? (b) College savings plans, such as a 529 plan, allow individuals to put money aside now to help pay for college later. If one such plan offers a rate of 2% compounded continuously, how much should be put in a college savings plan in 2015 to pay for 1 year of the cost of college at a 4-year private college for an incoming freshman in 2033?

The average annual cost of college at 4-year private colleges was $30,094 in the 2013–2014 academic year. This was a 3.8% increase from the previous year. (a) If the cost of college increases by 3.8% each year, what will be the average cost of college at a 4-year private college for the 2033–2034 academic year? (b) College savings plans, such as a 529 plan, allow individuals to put money aside now to help pay for college later. If one such plan offers a rate of 2% compounded continuously, how much should be put in a college savings plan in 2015 to pay for 1 year of the cost of college at a 4-year private college for an incoming freshman in 2033?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 3DTM

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