Suppose You Borrow Money from Your Parents for College Tuition

Multiple Choice

Suppose you borrow money from your parents for college tuition on January 1, 2015. Your parents require four annual payments of $40,000 each, with the first payment due on January 1, 2019. They are charging you 8% annual interest. What is the cost of the college tuition? (Use spreadsheet software or a financial calculator to calculate your answer. Round intermediary calculations two decimal places and round your final answer to the nearest dollar.)

A) $160,000
B) $113,336
C) $143,084
D) $105,171