Giselle used the table to predict the cost of one year of college.
| Category | Estimated Cost 2017-2018 |
| --------------- | ------------------------ |
| tuition | $12,450 |
| room and board | $10,125 |
| transportation | $2,600 |
| books and fees | $2,250 |
| other | $1,250 |
Giselle predicts that she will receive a grant for $4,000. If she has 4 years in which to save, what is the minimum monthly amount she should deposit in an interest bearing savings account to be able to pay her contribution for one year of college?
A. $400
B. $500
C. $600
D. $700
Answer (2)
Calculate the total cost of college: $12450 + 10125 + 2600 + 2250 + 1250 = $28675.
Subtract the grant: $28675 - 4000 = $24675.
Calculate the number of months to save: 4 × 12 = 48 months.
Calculate the minimum monthly deposit: $\frac{24675}{48} = 514.0625. T h ec l oses t an s w er f ro m t h eo pt i o n s i s \boxed{ 600} .
Explanation
Calculate Total Cost First, we need to calculate the total cost of one year of college. We add up the estimated costs for tuition, room and board, transportation, books and fees, and other expenses:
Total Estimated Cost The total cost is: 12450 + 10125 + 2600 + 2250 + 1250 = 28675 So, the total estimated cost for one year of college is $28 , 675 .
Subtract Grant Amount Next, we subtract the grant amount from the total cost to find out how much Giselle needs to cover with her savings:
Remaining Cost The remaining cost is: 28675 − 4000 = 24675 Giselle needs to save $24 , 675 after the grant.
Calculate Total Months for Saving Now, we calculate the total number of months Giselle has to save. Since she has 4 years to save, and there are 12 months in a year:
Total Saving Months Total months for saving: 4 years × 12 year months = 48 months Giselle has 48 months to save.
Calculate Minimum Monthly Deposit Finally, we divide the remaining cost by the total number of months to find the minimum monthly deposit amount:
Minimum Monthly Deposit Amount Minimum monthly deposit: 48 24675 = 514.0625 Therefore, Giselle needs to deposit at least $514.0625 each month. Since she needs to deposit a minimum amount, she should deposit $514.07 to ensure she has enough money. From the given options, the closest and safest amount is $600 .
Examples
Understanding how to save for college is a great skill to have. Let's say you want to buy a car that costs $10,000 in 5 years. If you can save $10,000 / (5 years * 12 months/year) = $166.67 per month, you'll be able to afford the car. This is a simple example of how understanding costs, savings, and time can help you achieve your financial goals.
Giselle needs to save $514.06 each month to meet her contribution for college. The closest provided option is $600, which is the safest amount to ensure she meets her savings goal. Therefore, the answer is C. $600.
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