Present value Prestigious University is offering a new admission and tuition payment plan for all alumni. On the birth of a child, parents can guarantee admission to Prestigious if they pay the first year's tuition. The university wll pay an annual rate of return of 7% on the deposited tuition, and a full refund will be available if the child chooses another university. The tuition is expected to be $16,000 a year at Prestigious 19 years from now. What would parer pay today if they just gave birth to a new baby and the child will attend college in 19 years? How much is the required payment to secure admission for their child if the interest rate falls to 2%? What would parents pay today if they just gave birth to a new baby and the child will attend college in 19 years? to the nearest cent

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Present value. Prestigious University is offering a new admission and tuition payment plan for all alumni. On the birth of a child, parents can guarantee admission to Prestigious if they pay the first year's tuition. The university will
pay an annual rate of return of 7% on the deposited tuition, and a full refund will be available if the child chooses another university. The tuition is expected to be $16,000 a year at Prestigious 19 years from now. What would parents
pay today if they just gave birth to a new baby and the child will attend college in 19 years? How much is the required payment to secure admission for their child if the interest rate falls to 2%?
What would parents pay today if they just gave birth to a new baby and the child will attend college in 19 years?
(Round to the nearest cent)
Transcribed Image Text:P3-13 (similar to) Present value. Prestigious University is offering a new admission and tuition payment plan for all alumni. On the birth of a child, parents can guarantee admission to Prestigious if they pay the first year's tuition. The university will pay an annual rate of return of 7% on the deposited tuition, and a full refund will be available if the child chooses another university. The tuition is expected to be $16,000 a year at Prestigious 19 years from now. What would parents pay today if they just gave birth to a new baby and the child will attend college in 19 years? How much is the required payment to secure admission for their child if the interest rate falls to 2%? What would parents pay today if they just gave birth to a new baby and the child will attend college in 19 years? (Round to the nearest cent)
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