Suppose That You Are Planning to Enroll in a Master's

question 9

Multiple Choice

Suppose that you are planning to enroll in a master's program two years in the future.The cost to enroll is $150,000.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 $9,000 after one year and $15,000 after two years.
•Your grandparents saved money for your education in a tax-favored savings account and will give you $18,000 after one year.
•Your parents offer you the choice of taking $50,000 at any time,but that amount is deducted from your inheritance.They are risk-averse investors and put money in ultra-safe government bonds giving 2 percent per year.
The borrowing and the lending rate at the bank is 4 percent per year,compounded daily.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?

• A) $39,489
• B) $40,530
• C) $42,489
• D) $47,501
• E) None of these answers are correct.

---

Definitions:

Nominal Variable

A type of categorical variable with distinct categories that do not have a specific order or ranking.

Final Grade

The comprehensive evaluation of a student's performance in a course, typically expressed as a letter grade or percentage.

Ordinal Variable

An ordinal variable is a type of categorical data with a set order or scale but without a precise distance between its categories.

Class Rank

A measure that indicates a student's academic performance relative to their peers, often used for college admissions or award determinations.