# Amount required

Suppose that a young couple has just had their first baby and they wish to ensure that enough money they have to pay for their childs education. Currently college tution is around 12,500 and its historically increasing at 4% per year. Assume that college cost keep increasing on average of 4% and her college savings are invested at 7% interest. What is the amount of money she will need to have available at age 18 to pay her four year college. The correct answer is 101,290 but i couldnt calculate it would be great if u explain your calculation also thankyou

The correct answer IS NOT \$101,290 unless the problem says she plans to pay for all 4 years in a lump sum at age 18. If she will pay annually the answer is \$97,110. Start with \$12.5K and compound it annually at 4% to get the college costs at age 18, 19, 20, and 21. Their answer is 4 times the \$25,323 you need at age 18. This is wrong because between 18 and 19 the costs will increase by 4% while you can earn 7% on the money. You discount the figures you got for ages 19-21 in the first step using a 7% rate to get the PV of each at age 18 (discount 19 for one year, 20 for 2 years, etc.) and add those three numbers to the \$25,323 to get \$97,110. Hope this helps (I hate typing the word discount. Almost had a typo that would bounce me from the boards)

I came up with the same thing as Super I. Best, TheChad

Another homework problem? Don’t you have a tutor you can ask this sort of thing? http://www.analystforum.com/phorums/read.php?11,641372,641416#msg-641416

but isnt it helping u , solving a number of problem chrismaths ? We are in a learning process and i think its great when something is challenging and gives u a hard tiime plus u guys are supposed to be expert at this … i dont think it should bother… plus tutors … aint helpfull trust me

LOL. I love it. Getting guys to do your homework for you and trying to spin it to where you are actually helping them. You’ve got stones.

home work finished one month ago its exam preperation now which is on 19 i will wish u merry Xmas n new year on that date n wont show off untill next year

Wait a minute… I’m helping you with your homework? Where do i send my invoice? I’m a charterholder who checks the boards to help other people along, not to do their non-CFA realted homework. If you’re in the NY area you better let me know and buy me a drink at thevery least.

Don’t u think its awesome that u can help ppl do their hw? I’d feel like a genius if i helped a kid do his algebra hw.

Not really. This board is a quid pro quo. I’m doing my CFA - and I get help from other candidates and charterholders on the things I have trouble with. In return I try to help other candidates with issues they have. It’s a study group targeting a specific exam, with a specific curriculum - Hence why at the top of the page it says Level I, not “post your homework problems here”. That’s what tutors are for.

supersunny that’s so cheeky!

i agree with chrismaths… (i always wondered why supersunny’s questions seemed a bit “iffy”)

heyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy !! stopppppppppppppp next year i am sitting for CFA !! and if i am asking soem help to improve my basics wa does it cost u ?? do i tell u guys do my examss ?? its practice same as u do… and chrismaths … being selfish isnt worth is this wa CFA standards teach u ?? Knowledge increases when u enhance it and if in case if it bothers u ppl alot then i realy apologise dun answer my questions and keep it upto u …its really shamefull that you ppl who one day are goin to be top professionals cant even help their fellow men u specific chrismaths… thankyou

If you posted in the general forum and made clear that you weren’t a CFA candidate, then no one would have a problem. But you misrepresent yourself, then attack. So crawl away. This is a local forum for local people. we’ll have no trouble here. From the About Us and Message Board Rules: “AnalystForum is an open forum for communication relating to the CFA exam. We don’t have a long list of fine print, but what we do have is not negotiable, so please respect our Message Board Rules. AnalystForum may at any time, without notice and at our sole discretion, remove or edit any message for violating the following Message Board Rules.” "Our Mission: “To provide every CFA® charterholder and candidate with the information and communication necessary to advance the profession to its highest level.” Who We Are: AnalystForum was established in June, 1999 to provide an online community designed exclusively for CFA® charterholders and candidates. We believe communication is essential to advancing our profession, which is among the most exciting and fulfilling in the world. What We Offer: AnalystForum aims to provide CFA® charterholders and candidates with an online community which adds value to their online experience by providing the following services. " You’ll notice the distinct absence of “people who can’t be bothered to do their own homework then expect CFA® charterholders and candidates to be grateful for the opportunity to do it for them” anywhere in the above text.

supersunny, your writing is a feast for my red editing marker. Can you picture it salivating? Otherwise, keep those questions coming. You’ll just owe a few beers here and there, as Super pointed out.

wow

hahahahahaha,

a bit off topic, but supersunny, are you male or female?