Question
You are about to begin your senior year in college. Your plan is to complete this last year in college and then (starting one year
You are about to begin your senior year in college. Your plan is to complete this last year in college and then (starting one year from now) go through a 2-year MBA program (this is a way better plan than law school). You will need $13,000 for the upcoming, senior year. Todays MBA price, per year, is $18,000, but we expect this MBA price to increase 4% per year for each of the next two years (amazing how this happens every yearespecially when loans are guaranteed by the government, right?). Your uncle offers to put you through school, and he will do so by depositing a single lump sum in an investment account, today, which projects a 7% (APR) annual return. (7)
a. How large must your uncles deposit be?
b. How much will be in the account immediately after you make your first withdrawal?
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