Calculate the amount you would have to invest today

Reference no: EM132171299

Question: Assume that your private university's tuition is $28,000.

(a) If the inflation rate for tuition is 5% per year, calculate what the tuition will cost 20 years from now.

(b) If the general inflation rate for the economy is 3% per year, express that future tuition in today's dollars.

(c) Calculate the amount you would have to invest today to pay for tuition costs 20, 21, 22, and 23 years from now. Assume you can invest at 7% per year, your income tax rate is 40% per year, and the tuition has to be paid atthe beginning ofthe year. Contributed by D. P. Loucks, Cornell University

Reference no: EM132171299

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