Suppose that a young couple has just had a baby boy, and they wish to have...

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Finance

Suppose that a young couple has just had a baby boy, and theywish to have enough saved to fund four years of college educationat a school like UCLA when their son is at the ages of 19-22.Suppose this year’s total expense of an undergraduate student atWashU, including tuition, room and board, books and supplies,amounts to $74,000. This annual cost is expected to grow at 3.5% ayear. To simplify the timeline, they assume that all the expenseswill be paid in full on their child’s birthdays while he is incollege, that is, his 19th to 22nd birthdays. The annual returnexpected on a college savings account is 8%. How much do they needas of today in order to fund their child’s college education?

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3.6 Ratings (314 Votes)

Annual expenses of an undergraduate student currently 74000 which is expected ti grow at 35 annually Hence at the end of 19th year the amount required will be P 1in Where P principal amount i rate of interest and n number of See Answer

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