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Explain the conservative discount rate

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Reference no: EM133118780

An elite law school will charge you $38,900.00 for your first year of tuition. This is due at the beginning of the year. You anticipate tuition to increase by 4.00% each year going forward. You will spend three years in the law program.

You are unsure what discount rate to use to value the opportunity. You have a conservative discount rate, 5.00%, and an aggressive rate of return, 12.00%.

Using the conservative discount rate, what is the value of the tuition the day you start the law school?

Reference no: EM133118780

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