You just paid full tuition for your junior year in college. Your plan is to complete this year, then, for your last year in college(starting one year from now) you will need to pay that final year of undergrad tuition. THEN, after college, you planto go through a 2-year MBA program (this is a way better plan than law school). Today's price is $11,000 for your senior year, adn this payment is due one year from today, and the price is expected to increase 3% each year. Today's MBA price, per year, is $19,000 but we expect this MBA price to increase 4% per year for each of the next 2 years. Tuition for each MBA year is due a the start of each year(so the payments due for your MBA payments come 2 and 3 years from now). Your uncle offers to put your through school, and he will do so by depositing a single lump sum in an investment account today, which projects an 8% apr.

How large must the uncle's deposit be?

How much will be in the account immediately after you make your second withdrawal( to pay the first year of MBA tuition)?

Answer rating: 100% (QA)

To calculate the amount of money needed for the uncles deposit we need to find the present value of ... View the full answer