If Four Years of College Is Expected to Cost $150,000

question 96

Essay

If four years of college is expected to cost $150,000 18 years from now, how much must be deposited now into an account that will average 8 percent annually in order to save the $150,000? By how much would your answer change if you expected 11 percent annually?

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Definitions:

Innovating Company

A company that introduces new ideas, products, or methods to improve or transform its business operations.

Absolute Advantage

The ability of a country to produce a specific good or service more efficiently than any rival.

Opportunity Cost

The cost of the next best alternative that is foregone when making a decision.

Rival

An individual or entity competing against others for the same objective or for superiority in the same field.