reported that the average annual cost of tuition, room, and board, and other expenses at public four-year colleges is
$21,500 in 2023 (to be paid at the beginning of 2023). The cost has risen 3.5% over the last year. You feel this
percentage increase is a good long-term estimate. You also believe that you can earn a rate of 7% compounded
annually on investments to meet this goal./nD.
If you were to invest a lump sum today in hopes of covering your daughter's college costs, how
much would you have to invest? Assume you can only come up with 80% of this value. What is the
maximum you can afford to spend on your daughter's four-year college education.
Fig: 1
Fig: 2