Assuming That College Costs Continue to Increase an Average of 4

question 41

Essay

Assuming that college costs continue to increase an average of 4% per year and that all her college savings are invested in an account paying 7% interest,then what is the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education?

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Definitions:

Total Rate of Return

A measure of the total gain or loss on an investment over a specified period, including both capital gains and dividends or interest.

Total Dollar Return

The overall financial gain or loss on an investment, expressed in dollars, including dividends, interest, and capital gains.

Dividend Payments

Cash payments made by a company to its shareholders as a distribution of profits.

Variance

A statistical measurement of the dispersion of a set of data points, reflecting how much each number in the set differs from the mean.