Question

Upstate University charges ?$17,000 a year in graduate tuition. Tuition rates are growing at 2.5% each year. You plan to enroll in graduate school in five years. What is your expected graduate tuition in five years?

Answer 1

To calculate the expected graduate tuition in five years at a 2.5% annual increase, the compound interest formula is used, resulting in an expected tuition cost of $19,238.77.

Step-by-step explanation:

The student is asking for the expected graduate tuition costs at Upstate University after five years, given that the current tuition is $17,000 and increases by 2.5% annually.

To calculate this, we use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount, r is the annual interest rate (growth rate in this context), n is the number of times that interest is compounded per year, and t is the time the money is invested or borrowed for, in years.

In this case, since tuition increases once per year, the growth rate will be compounded annually (n = 1).

Substituting the given values into the formula gives us:

A = $17,000(1 + 0.025/1)^(1*5)

A = $17,000(1 + 0.025)^5

A = $17,000(1.025)^5

A = $17,000(1.1314)

A = $19,238.77 (rounded to two decimal places)

Therefore, the expected tuition at Upstate University in five years is $19,238.77.