Use the table to answer the question.
Monthly Contribution
(dollars)
Total Amount After 3 Years of Investment
with a 4.2% Annual Interest Rate (dollars)
125 4,803.64
175 6,725.09
225 8,646.54
300 11,528.72
The information in the table shows how much a specific monthly contribution can result in after 3 years of investment with a 4.2% annual interest rate, compounded monthly.
On average, the annual cost to attend a 2-year public institution in the 2020-2021 academic year is $3,900. If the goal is to cover the cost for two years at a 2-year public institution after 3 years of investment, what is the minimum amount a student should be saving each month?
(1 point)
Responses
$125
$125
$300
$300
$225
$225
$175
$175
To cover the cost of two years at a 2-year public institution, the student would need to save at least $3,900 per year for 2 years, which is a total of $7,800.
Looking at the table, the closest amount to $7,800 after 3 years of investment is $8,646.54. The corresponding monthly contribution for that amount is $225.
Therefore, the minimum amount a student should be saving each month is $225.