Use the Information for the Question(s) Below

question 64

Multiple Choice

Use the information for the question(s) below.
Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's university education. Currently university tuition, books, fees, and other costs average $12,500 per year. On average, tuition and other costs have historically increased at a rate of 4% per year.
-Assuming that university costs continue to increase an average of 4% per year and that all her university savings are invested in an account paying 7% interest,then the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education is closest to:

• A) $97,110
• B) $107,532
• C) $101,291
• D) $50,000

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price level, at a given time.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price during a specified time period.

Price

The price expected, requisite, or delivered in remuneration for an object or service.

Market Price

The contemporary valuation at which a commodity or service can be acquired or disposed of in a commercial environment.