If one year of college currently costs $25,000, how much will it cost Grand Rapids, Michigan's resident Michelle Spindle to pay for one year of schooling for newborn daughter, Melissa, 18 years from now, assuming a 5 percent annual rate of inflation? Use Appendix A-1 or the Garman/Forgue companion website. Round your answer to the nearest dollar. Round Future Value of a Single Amount in intermediate calculations to four decimal places.
If one year of college currently costs $25,000, how much will it cost Grand Rapids, Michigan's resident Michelle Spindle to pay for one year of schooling for newborn daughter, Melissa, 18 years from now, assuming a 5 percent annual rate of inflation? Use Appendix A-1 or the Garman/Forgue companion website. Round your answer to the nearest dollar. Round Future Value of a Single Amount in intermediate calculations to four decimal places.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Future Cost
If one year of college currently costs $25,000, how much will it cost Grand Rapids, Michigan's resident Michelle Spindle to pay for one year of schooling for newborn daughter, Melissa, 18 years from now, assuming a 5 percent annual rate of inflation? Use
Appendix A-1 or the Garman/Forgue companion website. Round your answer to the nearest dollar. Round Future Value of a Single Amount in intermediate calculations to four decimal places.
$
Transcribed Image Text:Appendix A-1
1%
2% 3%
1
2
3
4 1.0406 1.0824
5
1.6105
7
4% 5% 6% 7% 8% 9% 10%
1.0100 1.0200 1.0300 1.0400 1.0500 1.0600 1.0700 1.0800 1.0900 1.1000
1.0201 1.0404 1.0609 1.0816 1.1025 1.1236 1.1449 1.1664 1.1881 1.2100
1.0303 1.0612 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950
1.3310
1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641
1.0510 1.1041 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386
6 1.0615 1.1262 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771
1.0721 1.1487 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280
8 1.0829 1.1717 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926
1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719
1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674
1.1157 1.2434 1.3842 1.5395 1.7103 1.8983 2.1049 2.3316
12 1.1268 1.2682 1.4258 1.6010 1.7959 2.0122 2.2522 2.5182
1.1381 1.2936 1.4685 1.6651 1.8856 2.1329 2.4098 2.7196
1.3195 1.5126 1.7317 1.9799 2.2609 2.5785 2.9372 3.3417
1.3459 1.5580
2.0789
1.7716
1.9487
2.1436
9
1.0937 1.1951
2.3579
10
1.1046 1.2190
2.5937
11
2.5804
2.8531
28127
3.1384
13
3.0658
3.4523
14
1.1495
3.7975
15
1.8009
3.1722 3.6425
4.1772
1.1610
1.1726
16
1.8730
2.1829
4.5950
1.3728 1.6047
1.6528
2.3966 2.7590
2.5404
2.9522
2.6928 3.1588
2.8543 3.3799
17
1.1843 1.4002
1.9479
3.4259 3.9703
3.7000 4.3276
3.9960 4.7171
5.0545
18 1.1961 1.4282 1.7024
5.5599
7.2579
2.29 20
2.0258 2.4066
19 1.2081 1.4568 1.7535 2.1068 2.5270 3.0256 3.6165 4.3157 5.1417 6.1159
20 1.2202 1.4859 1.8061 2.1911 2.6533 3.2071 3.8697 4.6610 5.6044 6.7275
21 1.2324 1.5157 1.8603 2.2788 2.7860 3.3996 4.1406 5.0338 6.1088 7.4002
22 1.2447 1.5460 1.9161 2.3699 2.9253 3.6035 4.4304 5.4365 6.6586 8.1403
23 1.2572 1.5769
1.9736 2.4647 3.0715 3.8197 4.7405 5.8715
8.9543
24 1.2697 1.6084
2.0328 2.5633 3.2251 4.0489 5.0724 6.3412 7.9111 9.8497
25 1.2824 1.6406 2.0938 2.6658
5.4274 6.8485 8.6231 10.8347
26 1.2953 1.6734 2.1566 2.7725
5.8074 7.3964 9.3992 11.9182
27 1.3082 1.7069 2.2213 2.8834
6.2139 7.9881 10.2451 13.1100
28 1.3213 1.7410 2.2879 2.9987 3.9201 5.1117 6.6488 8.6271 11.1671 14.4210
1.3345 1.7758 2.3566 3.1187 4.1161 5.4184 7.1143 9.3173 12.1722 15.8631
1.3478 1.8114 2.4273 3.2434 4.3219 5.7435 7.6123 10.0627 13.2677 17.4494
1.4889 2.2080 3.2620 4.8010 7.0400 10.2857 14.9745 21.7245 31.4094 45.2593
1.6446 2.6916 4.3839 7.1067 11.4674 18.4202 29.4570 46.9016 74.3575 117.3909
3.3864 4.2919
3.5557 4.5494
3.7335 4.8223
29
n
30
40
50
Future Value of a Single Amount ($1 at the End of n Periods) (Used to Compute the Compounded
Future Value of a Known Lump Sum)
11% 12% 13% 14% 15%
16% 17% 18% 19% 20%
1.1600
1.3456
1.5609
1.1900 1.2000
1.4161 1.4400
1.6852 1.7280
1.1100
1.2321
1.3676
1.5181
1.6851
1.8704
2.0762
2.3045
2.5580
1.8739
2.1924
2.0053
2.3864
2.0736
2.4883
2.8398
2.9860
3.5832
2.5652
3.0012
3.5115
4.1084
3.3793
4.0214
4.2998
3.7589
4.4355
5.2338
4.7854
5.1598
2.8394
4.8068
5.6947
6.1917
3.1518
5.6240
6.1759
6.7767
7.4301
3.4985
6.5801
7.2876
3.8833
8.0642 8.9161
9.5964 10.6993
10.1472 11.4198 12.8392
8.5994
4.3104 4.8871
4.7846
5.3109
1.1200 1.1300 1.1400 1.1500
1.2544 1.2769 1.2996 1.3225
1.4049 1.4429 1.4815 1.5209
1.5735 1.6305 1.6890 1.7490
1.8106
1.7623 1.8424 1.9254 2.0114 2.1003
1.9738 2.0820 2.1950 2.3131 2.4364
2.2107 2.3526 2.50 23 2.6600 2.8262
2.4760 2.6584 2.8526 3.0590 3.2784
2.7731 3.0040 3.2519 3.5179 3.8030
3.1058 3.3946 3.7072 4.0456 4.4114
3.4785 3.8359 4.2262 4.6524 5.1173
3.8960 4.3345 4.8179 5.3503 5.9360
4.3635
4.8980 5.4924 6.1528 6.8858 7.6987
5.5348 6.2613
7.0757 7.9875 9.0075
5.4736 6.2543 7.1379 8.1371
9.2655 10.5387 11.9737 13.5895 15.4070
6.1304 7.0673 8.1372 9.3576 10.7480 12.3303 14.1290 16.1715 18.4884
6.8660 7.9861 9.2765 10.7613 12.4677 14.4265 16.6722 19.2441 22.1861
6.5436 7.6900 9.0243 10.5752 12.3755 14.4625 16.8790 19.6733 22.9005 26.6233
7.2633 8.6128 10.1974 12.0557 14.2318 16.7765 19.7484 23.2144 27.2516 31.9480
8.0623 9.6463 11.5231 13.7435 16.3665 19.4608 23.1056 27.3930 32.4294 38.3376
8.9492 10.8038 13.0211 15.6676 18.8215 22.5745 27.0336 32.3238 38.59 10 46.0051
9.9336 12.1003 14.7138 17.8610 21.6447 26.1864 31.6293 38.1421 45.9233
11.0263 13.5523 16.6266 20.3616 24.8915 30.3762 37.0062 45.0076 54.6487
12.2392 15.1786 18.7881 23.2122 28.6252 35.2364 43.2973 53.1090 65.03 20
13.5855 17.0001 21.2305 26.4619 32.9190 40.8742 50.6578 62.6686 77.3881
15.0799 19.0401 23.9905 30.1666 37.8568 47.4141 59.2697 73.9490 92.09 18 114.4755
16.7386 21.3249 27.1093 34.3899 43.5353 55.0004 69.3455 87.2598 109.5893 137.3706
18.5799 23.8839 30.6335 39.2045 50.0656 63.8004 81.1342 102.9666 130.4112 164.8447
20.6237 26.7499 34.6158 44.6931 57.5755 74.0085 94.9271 121.5005 155.1893 197.8136
22.8923 29.9599 39.1159 50.9502 66.2118 85.8499 111.0647 143.3706 184.6753 237.3763
65.0009 93.05 10 132.7816 188.8835 267.8635 378.7212 533.8687 750.3783 1051.668 1469.772
184.5648 289.0022 450.7359 700.2330 1083.657 1670.704 2566.215 3927.357 5988.914 9100.438
5.8951
55.2061
66.2474
79.4968
95.3962
1.1700
1.3689
1.6016
1.1800
1.3924
1.6430
1.9388
2.2878
2.6996
3.1855
Expert Solution
Step 1
We have to find the inflation adjusted cost of one year at college, a few years form now. We will thus need to calculate the FV of the current cost.
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