CA 10.4 Rosanne and Benjamin Carter married young and had two children by the ti

Question

CA 10.4 Rosanne and Benjamin Carter married young and had two children by the time they were 25. They had trouble making ends meet unti Rosanne returned to work when Kaitlyn, their youngest, was in school full time. Rosanne currently earns $25,000 per year after taxes, and the couple estimates that they can allocate a substantial portion of her income to their children's college fund, The Carters are now 31 years old, and their children are 10 and 7. They want to begin a savings program to help them Kay for their children's college education at an in-state public university, which they estimate is $24,000 currently. Assume that the education costs will increase at a rate of 4 percent per year, (Exclude commas from your response.) Attempt: 1 of 1 | Points Available: 25 1.a: What will annual costs be when each of the two children start college at age 18? when their 10-year-old starts college when their 7-year old starts college.

Explanation / Answer

They has two children one aged 10 and another 7

The college going age would be 18, so they have 8 more years for older one and 11 more years for younger one for substantial savings to cover their college fees

The present fees $24,000 growing at 4% per year

Future Value after 8 Years = 24,000*1.04^8 = $32,846 and after 11 years = 24,000*1.04^11 = 36,947

The annual cost for 10 years old when starts college is $32,846 and for 7 year old when starts college is $36,947

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