Question

Question 3(Multiple Choice Worth 5 points)

(02.04 HC)
Bill wants to attend a college with a current tuition of $10,000 a year. He will graduate from high school in five years. Roughly how much will Bill need to save for
one-year's tuition to account for an annual rate of inflation of 3%?
O $11.590.00
O $11,255.00
O $10,000.00
O $13,000.00

Answer 1

Money need for one-year's tuition (A) = $11,590 (Approx)

Step-by-step explanation:

Given:

Initial value (P) = $10,000

Annual rate of inflation (r) = 3% = 0.03

Time taken = 5 years

Find:

Money need for one-year's tuition (A)

Computation:

`A=p[1+r]^n\\\\A=10,000[1+0.03]^5\\\\A = 11,592.7407`

Money need for one-year's tuition (A) = $11,590 (Approx)