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# A program instituted in a particular state allows parents to

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Senior Manager
Joined: 18 Feb 2008
Posts: 494

Kudos [?]: 125 [0], given: 66

Location: Kolkata
A program instituted in a particular state allows parents to [#permalink]

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04 Sep 2010, 00:25
00:00

Difficulty:

25% (medium)

Question Stats:

100% (01:01) correct 0% (00:00) wrong based on 16 sessions

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A program instituted in a particular state allows parents to prepay their children’s future college tuition at current rates. The program then pays the tuition annually for the child at any of the state’s public colleges in which the child enrolls. Parents should participate in the program as a means of decreasing the cost of their children’s college education.

Which of the following, if true, is the most appropriate reason for parents not to participate in the program?
a)The parents are unsure about which public college in the state the child will attend.

b)The amount of money accumulated by putting the prepayment funds in an interest-bearing account today will be greater than the total cost of tuition for any of the public colleges when the child enrolls.

c)The annual cost of tuition at the state’s public colleges is expected to increase at a faster rate than the annual increase in the cost of living.

d)Some of the state’s public colleges are contemplating large increases in tuition next year.

e)The prepayment plan would not cover the cost of room and board at any of the state’s public colleges.
[Reveal] Spoiler: OA

Kudos [?]: 125 [0], given: 66

Director
Status: Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
Affiliations: University of Chicago Booth School of Business
Joined: 26 Nov 2009
Posts: 956

Kudos [?]: 902 [0], given: 36

Location: Singapore
Concentration: General Management, Finance
Schools: Chicago Booth - Class of 2015

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04 Sep 2010, 00:33
Should be B. The interest on the principal pays > cost of tuition. Clearly the financial incentive clearly rules out others.

Kudos [?]: 902 [0], given: 36

Manager
Joined: 25 Jun 2010
Posts: 91

Kudos [?]: 44 [0], given: 0

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04 Sep 2010, 07:12
B

Posted from my mobile device

Kudos [?]: 44 [0], given: 0

Manager
Joined: 09 Jun 2010
Posts: 111

Kudos [?]: 148 [0], given: 1

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04 Sep 2010, 07:26
Which of the following, if true, is the most appropriate reason for parents not to participate in the program?
a)The parents are unsure about which public college in the state the child will attend.
Out of scope
b)The amount of money accumulated by putting the prepayment funds in an interest-bearing account today will be greater than the total cost of tuition for any of the public colleges when the child enrolls.
correct option. If the fund accumulated by parents themselves is greater than the plan, there is no reasion they participate in the program
c)The annual cost of tuition at the state’s public colleges is expected to increase at a faster rate than the annual increase in the cost of living.
Does not matter, the fund will cover the total cost!
d)Some of the state’s public colleges are contemplating large increases in tuition next year.
Does not matter, the fund will cover the total cost!
e)The prepayment plan would not cover the cost of room and board at any of the state’s public colleges.
The total amount may still be less that which the parents need to pay if they don't participate in the program at all

Kudos [?]: 148 [0], given: 1

Senior Manager
Joined: 16 Apr 2006
Posts: 270

Kudos [?]: 240 [0], given: 2

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05 Sep 2010, 14:21
B.
_________________

Trying hard to achieve something unachievable now....

Kudos [?]: 240 [0], given: 2

Re: GMAT TEASER CR(SOURCE:WWW.MBA.COM)   [#permalink] 05 Sep 2010, 14:21
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