In recent past, college fees had been increasing at about 8 percent per year. because this rate of increase exceeded the general inflation rate, Paula and Nancy felt it would decline to a level close to measures of general inflation, such as the Consumer Price Index. Thus they decided to assume that college fees would increase 6 percent per year. At this rate, how much will one year of college cost 18 years from this fall. Right now the cost of college for one year is $14,000.
The rate at which the cost of college education increases is assumed to be 6% per year. The cost of education right now is $14000.
The cost of education after 18 years would be 14000*(1+0.06)^18 = 39960.75
The cost of education after 18 years would be $39960.75