Hi This Is A Time Value Of Money Question Regarding Education Goals


This is a time value of money question regarding education goals.

A couple expects their child to go to a post secondary institution for 2 years when he reaches the age of 18 at a cost of $7500 per year in todays dollars. Currently the child is 15. Their advisor has cautioned them that education costs are rising rapidly and suggests using an inflation rate of 7% to calculate the savings required to meet the couples goal. The current inflation rate is 2%. The expected rate on a conservative portfolio is 3%.

Can someone (using calculator method) help determine what the education cost will be for this child when they turn 18 in todays dollars?

(I got 19,682 but don’t think its right)


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