Acapella University Offers to Lock-In a Student's Tuition for a Four

question 37

Essay

Acapella University offers to lock-in a student's tuition for a four year period. If tuition is $30,000 per year (payable at the end of each year) and the interest rate is currently 8%, what amount of money now would enable you to withdraw the $30,000 figure at the end of each of the next four years?

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Definitions:

Outsourcing

The business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees and staff.

Incremental Change

Gradual adjustments or improvements made over time to processes, strategies, or products, rather than major transformations or innovations.

Annual Operating Expenses

The total costs associated with running a business, organization, or project within a given fiscal year, excluding the cost of goods sold.

Deejay

A person who selects and plays recorded music for an audience, traditionally in settings like radio stations or nightclubs.