You Are Currently Saving for Your Child's College Education

question 73

Multiple Choice

You are currently saving for your child's college education.The current cost of college is $10,000 a year.You expect that college costs will continue to increase at a rate of 5 percent a year.Your child is scheduled to begin attending a four-year college 10 years from now .You currentl have $25,000 in an account which earns 6 percent after taxes.You would like to have all of the necessary savings by the time your child enters college, and you would like to contribute a constant amount at the beginning of each of the next 10 years in order to provide the necessary amount.(You want to make 10 equal contributions starting in Year 0 and ending at Year 9.) How much should you contribute to the account each year in order to fully provide for your child's education?

• A)$1,133.16
• B)$1,393.42
• C)$1,477.02
• D)$1,507.81
• E)$1,622.33

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Definitions:

Cerumen

The technical term for earwax, a substance produced by glands in the ear canal that protects the ears from dust, microorganisms, and other foreign particles.

Electronystagmography

A diagnostic test to record involuntary movements of the eye (nystagmus) caused by a condition or as a response to a test.

Auditory-evoked Response

An electrical potential in response to an auditory stimulus, used to assess hearing and brainstem function.

Tympanometry

A diagnostic test that measures the movement of the eardrum in response to changes in air pressure, indicating middle ear function.