Scott and Linda Have Been Saving to Pay for Their

question 101

Multiple Choice

Scott and Linda have been saving to pay for their daughter Casie's college education.Casie just turned 10 at (t = 0) ,and she will be entering college 8 years from now (at t = 8) .College tuition and expenses at State U.are currently $14,500 a year,but they are expected to increase at a rate of 3.5% a year.Ellen should graduate in 4 years-if she takes longer or wants to go to graduate school,she will be on her own.Tuition and other costs will be due at the beginning of each school year (at t = 8,9,10,and 11) . So far,Scott and Linda have accumulated $15,000 in their college savings account (at t = 0) .Their long-run financial plan is to add an additional $5,000 in each of the next 4 years (at t = 1,2,3,and 4) .Then they plan to make 3 equal annual contributions in each of the following years,t = 5,6,and 7.They expect their investment account to earn 9%.How large must the annual payments at t = 5,6,and 7 be to cover Casie's anticipated college costs?

• A) $1,965.21
• B) $2,068.64
• C) $2,177.51
• D) $2,292.12
• E) $2,412.76

---

Definitions:

Everyday Problems

Common or routine challenges and obstacles that people encounter in their daily lives.

Minor Nuisances

Small, often persistent issues or annoyances that are not significantly harmful but can be irritating or bothersome.

Mental Health

The state of well-being in which an individual realizes their abilities, can cope with normal stresses of life, and can work productively.

Health Psychology

A field of psychology focused on understanding how biological, psychological, and social factors influence health and illness.