What is the amount of the first deposit check

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Reference no: EM13203126

The following table lists likely tuition levels for the given years at a private university. Consider that the entire tuition payment for a given is made in one sum at the end of the year, that is, the tuition for 2022-23 is paid at the end of 2022.
Year Tuition
2022-22 $45,500
2023-24 $48,300
2024-25 $49,800
2025-26 $51,400

a. For a steady inflation rate of 2.2% from 2010 through 2025, calculate the equivalent four equal annual constant 2010 dollar payments which would coincide with the actual tuition payments given.

b. Using the inflation rate given and a market interest rate of 7.5%, calculate the equivalent four equal annual constant 2010 dollar payments which would coincide with the actual tuition payments given.

c. A family wants to start an education account in 2010 (1st payment at year end 2010) by making equal annual payments in constant 2010 dollars until the time of the last tuition payment. Calculate the equal annual constant 2010 dollar payment.

d. What is the amount of the first deposit check and the last one?

Reference no: EM13203126

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