01.Core Concepts

• Mark will pay $1,500 in tuition for the next 3 years. Tuition is due on January 1. The interest he can earn is 5.5%. • Beginning of • Year 3: $1,500 • Year 2: ($1,500 + $1,500) ÷ 1.055 = $2,922 • Year 1: ($1,500 + $2,922) ÷ 1.055 = $4,269 • Calculator: (BEG Mode) FV = 0, PMT = 1,500, N = 3, I/YR = 5.5 • Result: PV = –$4,269