Assume today is 1 September, and this is the birthday of your two children, Ashley and Alex. Ashley is 5 years old and Alex is 1 years old. Both children will start college when they turn 18. Ashley will take 3 years to graduate and you will pay tuition of £15,000 per year at the beginning of each school year. Alex will take 7 years to graduate and you will pay tuition of £10,000 per year, payable at the beginning of each school year. The interest rate is 7%. b) What is the present value of the tuition fees that you will have to pay for Alex? Please provide the details of your calculations and discuss your results.
Assume today is 1 September, and this is the birthday of your two children, Ashley and Alex. Ashley is 5 years old and Alex is 1 years old. Both children will start college when they turn 18. Ashley will take 3 years to graduate and you will pay tuition of £15,000 per year at the beginning of each school year. Alex will take 7 years to graduate and you will pay tuition of £10,000 per year, payable at the beginning of each school year. The interest rate is 7%. b) What is the present value of the tuition fees that you will have to pay for Alex? Please provide the details of your calculations and discuss your results.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 33P
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Assume today is 1 September, and this is the birthday of your two children, Ashley and Alex. Ashley is 5 years old and Alex is 1 years old.
Both children will start college when they turn 18. Ashley will take 3 years to graduate and you will pay tuition of £15,000 per year at the beginning of each school year. Alex will take 7 years to graduate and you will pay tuition of £10,000 per year, payable at the beginning of each school year. The interest rate is 7%.
b) What is the
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