Reference no: EM131457822
Question: Suppose that you are planning to enroll in a master's degree program two years in the future. Its cost will be the equivalent of $160,000 to enroll. You expect to have the following funds:
· From your current job, you can save $5,000 after one year and $7,000 after two years.
· You expect a year-end bonus of $10,000 after one year and $12,000 after two years.
· Your grandparents have saved money for your education in a tax-favored savings account, which will give you $18,000 after one year.
· Your parents offer you the choice of taking $50,000 at any time, but you will get that amount deducted from your inheritance. They are risk-averse investors and put money in ultrasafe government bonds that give 2 percent per year.
The borrowing and the lending rate at the bank is 4 percent per year, daily compounded. Approximating this by continuous compounding, how much money will you need to borrow when you start your master's degree education two years from today?
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: Suppose that you are planning to enroll in a master's degree program two years in the future. Its cost will be the equivalent of $160,000 to enroll.
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