Question

The total estimated cost of attending a public two-year college in Hasani’s home town last year was $2,265. The cost of attending the college is expected to increase 5% annually. Hasani plans to enter the college this year and attend for 2 years. Which is the best estimate for the total cost Hasani will pay for only his second year?
$2,270.66
$2,275.00
$2,491.50
$2,497.16

Answer 1

Last year's cost = \$2,265. With 5% annual increases, the second-year cost = 2,265*(1.05)^2 = 2,265*1.1025 = \$2,497.16.