3,4,5

Present value (with changing interest rates). Marty has been offered an injury settlement of $12,000 payable in 4 years. He wants to know what the present value of the injury settlement is if his opportunity cost is 3.5%. (The opportunity cost is the interest rate in this problem.) What if the opportunity cost is 7% ? What if it is 10%? 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 $22,000 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 3% ? Interest rate (with changing years). Keiko is looking at the following investment choices and wants to know what annual rate of return each choice produces. a. Invest $360.00 and receive $836.38 in 10 years. b. Invest $2,600.00 and receive $12,091.06 in 18 years. c. Invest $31,155.45 and receive $130,000.00 in 24 years. d. Invest $34,703.94 and receive $1,500,000.00 in 30 years