Yasmine plans to attend a four-year public university. She expects she will need to contribute $9,000 annually to her education. Which savings plan will help Yasmine save enough money to pay for one year of school, regardless of whether or not interest is earned on her savings?

Yasmine plans to attend a four-year public university. She expects she will need to contribute $9,000 annually to her education. Which savings plan will help Yasmine save enough money to pay for one year of school, regardless of whether or not interest is earned on her savings?

• A. $200 per month for 4 years
• B. $100 per month for 8 years
• C. A lump-sum of $9,000 now
• D. $300 per month for 2 years

Answer: (A)

The concept shown here is saving enough money by the time the payment is needed, without counting on any interest. The target is $9,000 for one year of education, and we’re looking at how much money can be built up purely from contributions. Saving $200 each month for four years adds up to 200 × 12 × 4 = 9,600. That means, even if no interest is earned, Yasmine would have at least $9,000 to cover one year of school, with a cushion of extra funds. This fits the timing of needing the money by the time she starts college in four years and guarantees the amount through steady contributions. The other options either don’t achieve the $9,000 target within the needed timeframe or don’t align with saving steadily for the four-year period. For example, saving $300 per month for two years totals only $7,200, which isn’t enough. Saving $100 per month for eight years would reach the target, but not in the four-year window before college begins. A lump-sum of $9,000 now does meet the amount, but it doesn’t illustrate committing to a plan that ensures the funds are set aside and available when needed, especially if the goal is to accumulate the money through consistent savings. So, saving $200 per month for four years is the plan that guarantees at least $9,000 based on contributions alone within the appropriate timeframe.

The concept shown here is saving enough money by the time the payment is needed, without counting on any interest. The target is $9,000 for one year of education, and we’re looking at how much money can be built up purely from contributions.

Saving $200 each month for four years adds up to 200 × 12 × 4 = 9,600. That means, even if no interest is earned, Yasmine would have at least $9,000 to cover one year of school, with a cushion of extra funds. This fits the timing of needing the money by the time she starts college in four years and guarantees the amount through steady contributions.

The other options either don’t achieve the $9,000 target within the needed timeframe or don’t align with saving steadily for the four-year period. For example, saving $300 per month for two years totals only $7,200, which isn’t enough. Saving $100 per month for eight years would reach the target, but not in the four-year window before college begins. A lump-sum of $9,000 now does meet the amount, but it doesn’t illustrate committing to a plan that ensures the funds are set aside and available when needed, especially if the goal is to accumulate the money through consistent savings.

So, saving $200 per month for four years is the plan that guarantees at least $9,000 based on contributions alone within the appropriate timeframe.