Use the Information for the Question(s) Below

Multiple Choice

Use the information for the question(s) below.
Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently college tuition, books, fees, and other costs average $12,500 per year. On average, tuition and other costs have historically increased at a rate of 4% per year.
-After many years teaching finance at Capilano University,Allen wants to establish a scholarship to offer 4 $1,000 awards to students whose performance is excellent in finance courses.If the university can negotiate a 12.75% effective interest rate,at least how much does Allen need to endorse over to the scholarship (closest estimate) ?

A) $32,000
B) $31,000
C) $31,500
D) $32,500