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Laura plans to enter a two-year MBA program that costs $25,000 a year (as of today) five years from now. The cost of this MBA
Laura plans to enter a two-year MBA program that costs $25,000 a year (as of today) five years from now. The cost of this MBA program is expected to increase at a 6% annual rate and expected to increase at this same rate from the first to second year of the program. (a) What is the expected cost for each year of this MBA program? (b) Laura wants to make single deposit today into an account paying 8% annually in order to cover the costs (2 annual withdrawals) of the MBA program. How large must this deposit be?
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