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?(1 point)

Question

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?(1 point)

Responses

8.3%
8.3%

9.6%
9.6%

8%
8%

5.6%

Answer 1

To find the percent of Arianna's household income that needs to be set aside for the baby's college fund, we need to determine the annual amount that needs to be saved.

The total amount needed in the savings account is $90,000.
The time period for saving is 18 years.

Dividing the total amount needed by the time period gives us the annual amount that needs to be saved:

$90,000 / 18 = $5,000 per year.

To determine the percent of the household's income, we divide the annual savings amount by the net income:

$5,000 / $60,000 = 0.0833

Converting this decimal to a percentage:

0.0833 * 100 = 8.33%

Therefore, the correct answer is 8.3%.