# Determine the Current Cost

1. Assume the current (4) year cost to attend Park University for tuition and books is $12,500. It is estimated that these costs will grow at a 7% annual rate.

2. The money that you annual set aside to meet this financial obligation is expected to earn an estimated 5% annually for the 7-year period (period from age 10 to age 17).

Solve:

How much money has to be set aside annually to have the entire estimated 4 years college tuition and book costs by the time your child hits age 17.

Hint:

1st - Calculate the amount of money that will be need in 7 years that covers the estimated college costs for 4 years of college. You were given a base dollar amount that increases annually at a specific rate.

2nd - Use of the annuity table to calculate the amount of money that's required to be set aside each year to equal the total dollar amount calculated in NO. 1.

Â© BrainMass Inc. brainmass.com March 4, 2021, 6:02 pm ad1c9bdddfhttps://brainmass.com/business/annuity/determine-current-cost-24984

#### Solution Preview

Guideline solution:

1. The current cost of $12,500. The cost increases at 7% per year for the next 7 ...

#### Solution Summary

The solution assists with calculating the current cost in various questions. It includes step-by-step details and is well presented.