A university decides to offer students two different tuition


Question Description:

24.99

A university decides to offer students two different tuition options. In the first, a new freshman can pay a one-time fixed payment of $100,000. In the second, the student would make four annual payments of $29,000 each. The university would guarantee the student that there would be no tuition increase during the four years. Assume that the first of the $29,000 payments would be due at the same time that the $100,000 would be due. If the appropriate discount rate is 6%, which option should students prefer?

Answer

24.99