Why is it B? Also, “in 5 years’ time” mean t=5 or 6. If t = 5, then we will pull the FV we get with 4 years not 5 years (END Mode). Hence, should the answer be 78,150.2?
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Case 1
1. calculate pv of tution fees by taking N=4
In normal mode only don’t use bgn mode because it is written that tution fees payable at the end of the year.
2. After getting pv put it as FV for investment required with N=5 years and calculate pv the ans is 70737 which is option B
Case 2
If you use bgn mode then you will get pv in first step at n=6 then you have to discount the pv by 6 yrs
The ans will match in both the cases
Just tell me one thing he is going in five years time, now if i draw time line from 0 so whn he will go is it 4 or 5?
He will go at 5
And fee will start from 6 bcoz it is at the end of the year right?
Yes fees will start at 6