B. Assuming that college costs continue to increase at 4% per year and that all her college savings are invested in an account paying 7% interest, what would be the amount of money that she will need to have available at age 18 to pay for all four years of her undergraduate education? (1.5 pt)

savings is  $97107.29

Explanation:

given data

college costs increase = 4% per year

invested paying r = 7%

available age g =  18

solution

we consider here Current Fees per year = $12500

we get here future value for 18 year that is

future value = 12500 ×     ...............1

future value FV = $25322.71

and

present value of growing annuity find the four years college fee

so here

Total Money =       ................2

so put here value

Total Money =

Total Money = 97107.288177

so that savings is  $97107.29

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