The current cost of graduate school tuition is $18,313 per year. The cost of tuition is...

The current cost of graduate school tuition is $18,313 per year.
The cost of tuition is rising at 8% per year.
You plan to attend graduate school for 3 years starting 3 years from now.

How much do you have to invest today if your savings account earns 4.88% APR compounded annually to just fund your tuition?

Expert Solution

Per year cost for the 1st year (after 3 year) = 18,313*(1.08^3) = $23069.11

Per year cost for the 2nd year (after 4 year) = 18,313*(1.08^4) = $24914.63

Per year cost for the 3rd year (after 5 year) = 18,313*(1.08^5) = $26907.81

PV of the 3 year cost = (23069.11/(1.0488^3)) + (24914.63/(1.0488^4)) + (26907.81/(1.0488^5))

PV of the 3 year cost = $61791.61

Hence, you need to invest today $61791.61 to just fund your tuition

jeff jeffy answered 2 years ago

The current cost of graduate school tuition is $18,093 per year. The cost of tuition is...

The current cost of graduate school tuition is $18,093 per year. The cost of tuition is rising at 7% per year. You plan to attend graduate school for 3 years starting 2 years from now. How much do you have to invest today if your savings account earns 3.90% APR compounded annually to just fund your tuition?

The current cost of graduate school tuition is $15,771 per year. The cost of tuition is...

The current cost of graduate school tuition is $15,771 per year. The cost of tuition is rising at 7% per year. You plan to attend graduate school for 3 years starting 3 years from now. How much do you have to invest today if your savings account earns 2.53% APR compounded annually to just fund your tuition?

The current cost of graduate school tuition is $19,203 per year. The cost of tuition is...

The current cost of graduate school tuition is $19,203 per year. The cost of tuition is rising at 6% per year. You plan to attend graduate school for 3 years starting 4 years from now. How much do you have to invest today if your savings account earns 3.95% APR compounded annually to just fund your tuition?

The current cost of graduate school tuition is $19,771 per year. The cost of tuition is...

The current cost of graduate school tuition is $19,771 per year. The cost of tuition is rising at 7% per year. You plan to attend graduate school for 3 years starting 2 years from now. How much do you have to invest today if your savings account earns 4.74% APR compounded annually to just fund your tuition?

1)The current cost of graduate school tuition is $15,000 per year. The cost of tuition is...

1)The current cost of graduate school tuition is $15,000 per year. The cost of tuition is rising at 6.00% per year. You plan to attend graduate school for 2 years starting 2 years from now. How much do you have to invest today if your savings account earns 3.00% APR compounded annually to just fund your tuition? Group of answer choices A) $31,323 B) $32,754 C) $32,236 D) $30,437 2) You would like to purchase a vacation home in 6...

The current cost of graduate school tuition is $15,464 peryear.The cost of tuition is...

The current cost of graduate school tuition is $15,464 per year.The cost of tuition is rising at 7% per year.You plan to attend graduate school for 3 years starting 3 years from now.How much do you have to invest today if your savings account earns 2.81% APR compounded annually to just fund your tuition?

Suppose you will go to graduate school for 3 years beginning in year 3. Tuition is...

Suppose you will go to graduate school for 3 years beginning in year 3. Tuition is $27,441 per year, due at the end of each school year. What is the Macaulay duration (in years) of your grad school tuitions? Assume a flat yield curve of 0.04. Assume annual compounding. In the above description, if you see a flat yield curve of 0.08 for example, then it means that the yield at all maturities is 8%.

1. Suppose you will go to graduate school for 4 years beginning in year 4. Tuition...

1. Suppose you will go to graduate school for 4 years beginning in year 4. Tuition is $25,942 per year, due at the end of each school year. What is the Macaulay duration (in years) of your grad school tuitions? Assume a flat yield curve of 0.06. Assume annual compounding. 2. Suppose in the question above, the tuition obligations have a Macaulay duration of 3.93 in years, and that you wish to immunize against the tuition payments by buying a...

1.) Suppose you will go to graduate school for 2 years beginning in year 4. Tuition...

1.) Suppose you will go to graduate school for 2 years beginning in year 4. Tuition is $28,359 per year, due at the end of each school year. What is the Macaulay duration (in years) of your grad school tuitions? Assume a flat yield curve of 0.06. Assume annual compounding. In the above description, if you see a flat yield curve of 0.08 for example, then it means that the yield at all maturities is 8%. 2.) Suppose in the...

1. a.Suppose you will go to graduate school for 3 years beginning in year 5. Tuition...

1. a.Suppose you will go to graduate school for 3 years beginning in year 5. Tuition is $34,657 per year, due at the end of each school year. What is the Macaulay duration (in years) of your grad school tuitions? Assume a flat yield curve of 0.05. b.Suppose in the question above, the tuition obligations have a Macaulay duration of 4.54 in years, and that you wish to immunize against the tuition payments by buying a single issue of a...

Question