Your daughter is considering two options for her career

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Your daughter is considering two options for her career. The first is to go to law school at Harvard. You estimate this will cost you $500,000 and you will have to pay this in one lump sum 5 years from today.

Her alternative choice is to go to Europe to musical conservatory. For this option she will need a violin worth $100,000 which you need to buy now. The cost of her schooling will be $100,000 per year for 3 years starting in 2 years. That is, in 2 years you will need $100,000, another $100,000 in 3 years and another $100,000 in 4 years.

If interest you can achieve is 10% compounded annually which option requires less money if you invest today to cover these educational expenses?

Reference no: EM132154582

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