You have an absolutely brilliant child who will be attending a private college in 11 years. You know that a four-year college now costs at least $15,000 per year, including tuition, books, room, and board. The cost of sending a child to college has increased by 4 percent per year, and you believe this will be true for the next 11 years. How much will the annual tuition be when your child is 18?
You have an absolutely brilliant child who will be attending a private college in 11 years. You know that a four-year college now costs at least $15,000 per year, including tuition, books, room, and board. The cost of sending a child to college has increased by 4 percent per year, and you believe this will be true for the next 11 years. How much will the annual tuition be when your child is 18?
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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Question
You have an absolutely brilliant child who will be attending a private college in 11 years. You know that a four-year college now costs at least $15,000 per year, including tuition, books, room, and board. The cost of sending a child to college has increased by 4 percent per year, and you believe this will be true for the next 11 years. How much will the annual tuition be when your child is 18?
Expert Solution
Step 1: Definition of Future Value
Future Value:
Future Value is the value of current money in the future. The future value calculation helps to identify the amount required in the future. The future value of money will be less than the current value of the same amount of money.
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