An elite law school will charge you $36,000.00 for your first year of tuition. This is due at the beginning of the year. You anticipate tuition to increase by 3.00% each year going forward. You will spend three years in the law program. You are unsure what discount rate to use to value the opportunity. You have a conservative discount rate, 6.00%, and an aggressive rate of return, 9.00%. Using the aggressive rate of return, what is the value today of your law school tuition?

An elite law school will charge you $36,000.00 for your first year of tuition. This is due at the beginning of the year. You anticipate tuition to increase by 3.00% each year going forward. You will spend three years in the law program. You are unsure what discount rate to use to value the opportunity. You have a conservative discount rate, 6.00%, and an aggressive rate of return, 9.00%. Using the aggressive rate of return, what is the value today of your law school tuition?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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