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%. a) What is the present value of the tuition fees that you will have to pay for Ashley? 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%. a) What is the present value of the tuition fees that you will have to pay for Ashley? Please provide the details of your calculations and discuss your results.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 37P

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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 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%. a) you prefer to pay a constant amount of money at the beginning of each year, starting next year until the year of the last tuition bill, to cover the present value of Alex AND Ashley's tuition fees in totality. How much should you be paying each year? 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%. a) What is the present value of the tuition fees that you will have to pay for Ashley? Please provide the details of your calculations and discuss your results. 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. c) Instead, you prefer to pay a constant amount of money at the beginning of each year, starting next year until the year of the last tuition bill, to cover the present value of the totality of the tuition fees.…
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