Question
***could someone please explain how to arrive to these answers.*** thanks 5.2 A. Linus is 18 years old now, and is thinking about taking a
***could someone please explain how to arrive to these answers.*** thanks
5.2 A. Linus is 18 years old now, and is thinking about taking a 5-year university degree. The degree will cost him $25,000 each year. After he's finished, he expects to make $50,000 per year for 10 years, $75,000 per year for another 10 years, and $100,000 per year for the final 10 years of his working career. If Linus lives to be 100, and if real interest rates stay at 5% per year throughout his life, what is the equal annual consumption he could enjoy until that date?
Answers: NPV = 700,868.61; annual consumption = 35,696.72
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