To calculate the cost of college when college starts
Where:
L = the number of years in college
C = the current annual cost of college
g = the growth rate of college costs
i = the rate of interest earned on savings during college
F = the amount of savings need when college starts
N = the number of years until college starts
To calculate the value of savings at the time college starts
S = amount of savings today
A = annual additions to savings
n = number of years of saving
r = assumed rate of return
V = value of savings in n years
To calculate the percentage of costs covered by client’s savings
Where:
F = the amount of savings needed when college starts
V = value of savings in n years (
q = fraction of costs covered by savings
To calculate the dollars needed to fund the specified percentage of costs when college starts
V = qF
Where
V = dollars needed to fund specified fraction of costs when college begins
Q = fraction (in percent)
F = cost of college at the time college begins (derived from previous step)
To calculate the amount of annual additional savings needed to fund percentage of costs specified
Where:
S = amount of savings today
A = annual additions to savings
n = number of years until college
r = assumed rate of return
V = value of savings in n years