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