You Want to Send Your Grandchild to a Very Prestigious

question 31

Multiple Choice

You want to send your grandchild to a very prestigious university. You heard that a college education will cost $800,000 in 18 years. If you invest $10,000 at the end of each year, what IRR will you need in order to reach your goal of $800,000?

• A) 12.46%
• B) 13.65%
• C) 18.00%
• D) 15.52%

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Definitions:

Amortized

Amortization is the process of spreading out a loan into a series of fixed payments over time, covering both principal and interest.

Residual Value

The estimated value of an asset at the end of its useful life.

Lease Terms

The conditions under which a lease will be granted, including duration, payment intervals, fees, restrictions, and penalties.

Lease Obligations

Financial commitments a company incurs as a result of entering into a lease agreement for property, plant, or equipment.