You Are Currently Saving for Your Child's College Education

Multiple Choice

You are currently saving for your child's college education.The current cost of college is $10,000 a year.You expect that college costs will continue to increase at a rate of 5 percent a year.Your child is scheduled to begin attending a four-year college 10 years from now .You currently have $25,000 in an account which earns 6 percent after taxes.You would like to have all of the necessary savings by the time your child enters college,and you would like to contribute a constant amount at the beginning of each of the next 10 years in order to provide the necessary amount.(You want to make 10 equal contributions starting in Year 0 and ending at Year 9. ) How much should you contribute to the account each year in order to fully provide for your child's education?

A) $1,133.16
B) $1,393.42
C) $1,477.02
D) $1,507.81
E) $1,622.33