You have been accepted into a prestigious private university in Southe

You have been accepted into a prestigious private university in Southern California – congratulations! Since no one from this school has ever graduated in only four years, you anticipate that you will need to make 10 semi-annual tuition payments of

$25,000 each with the first cash flow six months from today. If you choose to discount these cash flows at an annual rate of 6%, what is the present value cost of tuition to attend your university of choice?
A) $186,814.54
B) $184,002.18
C) $250,000.00
D) $213,255.07

ANSWER

D
Explanation: D) Via Calculator: N = 5*2, I =6/2, PMT = 25,000, Solve for PV = $213,255.07.