Compute the total expected costs

Reference no: EM1355579

1. I am considering going to graduate school in 3 years. Current estimated cost is $32,000 per year. Those costs are expected to grow each year at the rate of inflation (3.2% per year). I intend to enter a two-year program. My first year tuition bill is due at the end of three years (for the first year of school) and my second tuition bill is due at the end of four years (for the second year of school). How much are the total costs expected to be in three and four years?

2. The money in the investment for my education earns an expected return of 10% per year. How much money needs to be in my account three years from today (when I pay my first tuition bill)? I am assuming that I will not make any additional contribution.

3. I have $41,000 in my account right now, which is not enough to pay all my tuition costs. I have the opportunity to add money to my account at the end of each of the next three years. If my account continues to earn 10% per year, and I make three equal payments, how much money should I contribute in each of these three payments?

Reference no: EM1355579

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