Reference no: EM132616821

Friend is 25 years old at t=0

In which their current position pays 40,000 at t=1 and it's expected to have a 3% raise every year the year after they start getting paid Grad school is:

4 years tuition cost is 30,000 at t=1

Whereas tuition will grow at 4% per year

First year out of grad school, salary is expected to be 60,000 at t=5

Before generalist, raise will be 4% raise every year the year after receiving salary

When they become senior manager , new salary will be $100,000 at t=10 with a yearly incremental raise of 6% every year the year after receiving salary retirement age = 65 borrow for loans at an annual interest rate of 8%

Problem 1: What is the present value at t=0 if they do not go to grad school

Problem 2: What is the present value as off age 25 of life-time salary if they do go to grad school?

Problem 3: Present value of tuition payments if they go to grad school

Problem 4: What is the net present value of going to law school?

Problem 5: How much will the friend owe after 4 years if incurred interest is 8%