Arianna has just had a child. She and her husband's net income is $60,000 a year between them. She has established a savings account for her child that needs to contain $90,000 after 18 years. What percent of her household's income will need to be set aside for the baby's college fund?
a 9.6%
b 8.3%
c 8%
d 5.6%
To determine the percentage of their income that needs to be set aside for the baby's college fund, we need to divide the desired amount in the savings account by their annual income and multiply by 100.
The yearly contribution needed for the savings account is $90,000 / 18 years = $5000/year.
The percentage of their income that needs to be set aside is ($5000/year / $60,000/year) * 100 = 8.3%.
Therefore, the correct answer is b) 8.3%.