Question

Maria estimates college tuition and fees, room and board, books, and other charges total $10,100. She will receive a scholarship for $1100. If she has 4 years to save, how much should she save per month to cover the costs of college (minus the scholarship)?




A.
$2525.00



B.
$2250.00



C.
$210.42



D.
$187.50

Answer 1

Maria needs to save $187.50 per month in order to attend college. 

First, subtract the $1,100 scholarship from the cost of college, or $10,100, to get $9,000. This is the amount that she needs to save after 4 years. Next, since she is saving monthly, we need to know how many monthly periods are in 4 years, so multiply 12 months/year by 4 years to get 48 monthly periods. Finally, divide the total amount needed ($9,000) by the monthly periods (48) to get $187.50. This answer would change if she earned any interest on her savings, and depending on the compounding period, if any, for such interest.