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Time Line

Hi Folks,

Hoping to clarify an issue that is confusing me. If grandparents are saving for a newborn’s college tuition in 18 yrs (question 23 of TVM), why is n=17?

Thanks fr the help.

Russ

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i dont know the exact wording in the question, but my guess is that it says the tuition is paid at the beginning of the 18th year, that is t = 17. this is something even some CFAs can get it wrong.

remember: t = 0 is the beginning of the first year (also known as the present time), t = 1 is the beginnning of the second year, and so on.

Definitely watch our for the wording.  You could also have a situation where the grandparents start depositing the day of birth and up to the 17th birthday, or starting with first birthday and going to the 18th, etc. 

A timeline could save yer bacon here, plus my standard advice of knowing how to use your calculator inside and out. yes

“Mmmmmm, something…” - H. Simpson

breadmaker wrote:
Definitely watch our for the wording.

Touché!

Simplify the complicated side; don't complify the simplicated side.

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S2000magician wrote:

breadmaker wrote:
Definitely watch our for the wording.

Touché!

Yeah, see, that “r” is riiiiiiight next to the “t”!!!!!  You could get rorally rtipped up!!!! blush

“Mmmmmm, something…” - H. Simpson