Bloomington University charges $53,730 for tuition. If they raise their tuition by 8% each year, how much will tuition be in 2 years?

Question

If necessary, round your answer to the nearest cent.

Answer 1

To calculate the tuition cost in 2 years after an 8% increase each year, we can use the formula for compound interest:

\[ \text{Future Tuition} = \text{Current Tuition} \times (1 + \text{rate})^{\text{number of years}} \]

Given:

• Current Tuition = $53,730
• Rate = 8% = 0.08
• Number of years = 2

Plugging in the values:

\[ \text{Future Tuition} = 53,730 \times (1 + 0.08)^2 \]

Calculating \( (1 + 0.08)^2 \):

\[ (1 + 0.08)^2 = 1.08^2 = 1.1664 \]

Now, we multiply the current tuition by this factor:

\[ \text{Future Tuition} = 53,730 \times 1.1664 \approx 62,684.032 \]

Rounding to the nearest cent, the tuition after 2 years will be approximately $62,684.03.