Question
Your son is about to start kindergarten in a private school. Currently, the tuition is $12,000 per year, payable at the start of the school
Your son is about to start kindergarten in a private school. Currently, the tuition is $12,000 per year, payable at the start of the school year (t=0). You expect annual tuition increases, on average, 6% per year over the next 13 years (t=1 to t=13). Assuming that your son remains in this private school through high school and that your current interest rate is 6%, then what is the present value of your son's private school education?
Answer and working in the form of: "you are expected to clearly write down the important formulas (E.g. present value or future value formula, IRR, NPV, etc.) in letters and substitute numbers into formulas in separate steps"
Thank you in advance
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