Question 19

Richard and Sue wants to provide full funding for their 3 year old daughter who is expected to start college when she is 18. The current annual cost of a 4 year college is $38,000 which is expected to increase by 3.5% per year. They expect to earn 5% on their investment. Calculate how much they should save by the end of every year in order to accumulate funding for 4 years of college when their daughter turns 18.

ANSWERS

A. $11,551

B. $13,197

C. $15,791

D. $14,780