You expect to pay $60,000 to a private college 4 years from today at the start of your child's freshman year. You expect to pay the same amount 5, 6 and 7 years from today. The annual return you can earn on cash invested today is 4%, compounded annually. 

 

a. What is the present value of your payments one year before your child starts college? 

b. What is the present value of your payments today? 

Answer rating: 100% (QA)

To calculate the present value of future payments we need to discount them back to the present using ... View the full answer