Question

Tuition costs at various colleges vary from $10,000 to $35,000 annually. These tuitions are expected to increase over time. If the annual rate of increase is 4 percent, what will be the new range in tuition costs in twelve years? Use Appendix A to answer the questions. Round your answers to the nearest dollar. The range at 4 percent is $ - $ . If the rate doubles from 4 to 8 percent, what will be the range in tuition costs after twelve years? Use Appendix A to answer the questions. Round your answers to the nearest dollar. The range at 8 percent is $

Answer 1

Tuition costs at various colleges vary from $10,000 to $35,000 annually

1. FV = PV * (1 + r)^n

n = 12 years

r = 4%

PV = 10,000

FV = 10,000 * (1 + 0.04)^12

FV = $16,010.3221856768

FV = $16,010

PV = 35,000

FV = 35,000 * (1 + 0.04)^12

FV = $56,036.1276498688

FV = $56,036

If interest rate is 4%, the new range in tuition costs in twelve years will be $16,010 to 56,036

2. If r = 8%

PV = 10,000

FV = 10,000 * (1 + 0.08)^12

FV = 25,181.7011681898

FV = $25,182

PV = 35,000

FV = 35,000 * (1 + 0.08)^12

FV = 88,135.9540886642

FV = $88,136

If interest rate is 8%, the new range in tuition costs in twelve years will be $25,182 to 88,136