Answer to Question #132063 in Financial Math for Ivan Markoski

Question

Tuition of $1669 will be due when the spring term begins in 4 months. What amount should a student deposit today, at 3.35 %, to have enough to pay the tuition?

Answer 1

Tuition of $1,669 will be due when the spring term begins in 4 months.

The amount that a student should pay today at 3.35% will be ;

Present Value (PV) =$\frac{Future Value (FV) } {(1+r)^{t}}$

PV = $\frac{FV} {(1 + r)^{4}}$

=$\frac{1669}{(1+\frac{0.0335}{12})^{4}}$

=$1650.49