Multiple Altempts Not allowed This b Force Completion This t

Multiple Altempts Not allowed This b Force Completion This test can be saved and resumed n once This test does no allw bhanges to he a sswer after submission are prohibited vQui Close Moving to the next question prevents changes to this answer Question 7 of 10 estion 7 1 points Save Ansas State university tuition and fees can be paid using one of two plans. Early bird: pay total amount due one yea in advance and eet % die nie oorti -psy tasla am ehen classes start. If the cost o tuition and ees is$18,000 peryear, and the interest rate is 6% peryear what is the equivalent a unto savings compared to hendasse sstart that s later than the early-bird plan. Moving to the next question prevents changes to this answer Question 7 of 10 e@ :59 AM U10/201 Type here to search

Solution

As per the early bird payment plan,

Value of payment today (after 8% discount) = 18000*(1-8%) = $16560

As per the second plan, the payment takes place at the start of the classes.

Then, value of the payment today = 18000/(1+R) = 18000/(1+6%) = $16981.13

Equivalent savings = 16981.13 – 16560 = $421.13

So, there is a saving of $421.13 if early bird payment plan is opted over the payment option at the start of the classes.