Math 133 Db

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  • Topic: Time, Annual percentage rate, Costs
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  • Published : May 3, 2013
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April 25, 2013
Math 133
DB Unit5

I have put a side 62,000 for my grandsons college tuition and I have found that the best most safe and effective way to earn money for the next 12 yrs until he goes to college is by investing it into a CD with an annual rate of 0 .90% (bankrate, 2013) and it is compounded monthly. I have researched to see if my investment would help with tuition in 12 years. I used an inflation calculator and with the current trend of 45% increases in college tuition per year in 12 years college will cost 99,900.49 in the first year and 8% inflation increase each year after. This was done for a 4yrs public college (College Cost Projecter, 2013). My Principal starting fund in 2013 grandson age 6 is $62,000. a) Annual Interest rate r= 0.90%

b) Investment time t= 18yrs
c) Interest compounded monthly n=12
d) Model of my investment earns as a function is f(t)=P(1+r/n)^nt f(12)=62,000(1+.009/12)^12t f(12)= 62,000(1+.009/12)^12*12
f(12)=62000(1+.00075)^12*12
f(12)=62000(1.00075)^12*12
f(12)=62000(1.00075)^144
f(12)=62000*144.108
f(12)=89,346.96 Future value of my investment
With the average cost of college today (National Center for Education Statistics, 2013) , I have found that I would have enough money for the first two years of college, if he were going today. In the future I would have enough for a portion of the first year. If available he would have to get loans, grants and scholarships in the future. I hope that future costs of college will not deter students from attending. References

(2013, 04 23). Retrieved from bankrate: http://www.bankrate.com (2013, 04 23). Retrieved from College Cost Projecter: http://www.hesc.ny.gov/content.nsf/sfc/college_tutition_cost_projector (2013, 04 23). Retrieved from National Center for Education Statistics: http://www.NCES.ed.gov/fastfacts
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