Final answer:
To calculate the amount Anna needs to set aside today, we can use the present value formula. Assuming Anna's daughter will be attending college in 5 years and the inflation for college costs averages 5.6 percent, the present value can be calculated by dividing the future value by (1 + interest rate)^n, where the interest rate is 2.5 percent.
Step-by-step explanation:
To calculate the amount Anna needs to set aside today, we can use the present value formula. The present value (PV) is equal to the future value (FV) divided by (1 + r)^n, where r is the interest rate and n is the number of years. Assuming Anna's daughter will be attending college in 5 years and the inflation for college costs averages 5.6 percent, we can calculate the future value using the formula FV = current tuition and fees * (1 + inflation rate)^n. Finally, we can calculate the present value by dividing the future value by (1 + interest rate)^n, where the interest rate is 2.5 percent.
Let's plug in the values:
Current tuition and fees: $43,118
Inflation rate: 5.6%
Interest rate: 2.5%
Number of years: 4
Future value = $43,118 * (1 + 0.056)^5 ≈ $55,285.01
Present value = $55,285.01 / (1 + 0.025)^5 ≈ $45,410.07
Therefore, Anna needs to set aside approximately $45,410.07 today to pay for four years of tuition and fees.