a. If Rachael’s tuition, fees, and expenditures for books this year total $12,000, what will they be during her senior year (three years from now), assuming costs rise 4 percent annually? (Hint: Use Appendix A.1 or the Garman/Forgue companion website.)
b. Rachael is applying for a scholarship currently valued at $5,000. If she is awarded it at the end of next year, how much is the scholarship worth in today’s dollars, assuming inflation of 3 percent? (Hint: Use Appendix A.2 or the Garman/Forgue companion website.)
c. Rachael is already looking ahead to graduation and a job, and she wants to buy a new car not long after her graduation. If after graduation she begins an investment program of $2,400 per year in an investment yielding 6 percent, what will be the value of the fund after three years? (Hint: Use Appendix A.3 or the Garman/Forgue companion website.)
d. Rachael’s Aunt Karroll told her that she would give Rachael $1,000 at the end of each year for the next three years to help with her college expenses. Assuming an annual interest rate of 2 percent, what is the present value of that stream of payments? (Hint: Use Appendix A.4 or the Garman/Forgue companion website.)
