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)
• $300
• $175
• $125
• $225
To find the minimum amount a student should be saving each month, we need to consider the total cost of attending a 2-year public institution for two years. The annual cost is given as $3,900, so the total cost for two years will be $3,900 x 2 = $7,800.
Using the table, we can determine how much the monthly contribution can result in after 3 years of investment with a 4.2% annual interest rate, compounded monthly. The closest option to $7,800 is $8,986, which corresponds to a monthly contribution of $225.
Therefore, the minimum amount a student should be saving each month is $225.