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
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Transcribed Image Text:#24
An elite law school will charge you $35,500.00 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, 5.00%, and
an aggressive rate of return, 7.00%.
Using the conservative discount rate, what is the value of the tuition the day you start the law school?
Submit
Answer format: Currency: Round to: 2 decimal places.
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