Question

6%/12%Your grandmother is giving you $100 a month for four years while you attend college to earn your bachelor's degree. At a 6.0 percent discount rate, what are these payments worth to you on the day you enter college

Answer 1

Answer:

The answer is "$0.39010989$"

Explanation:

$PMT= 100\\\\n= 4 \times 12 =48 \\\\r= \frac{6.0}{12}= 0.005$

PV =?

$PV= PMT\times \frac{(1-\frac{1}{1+r^n})}{r}$

      $=100 \times \frac{(1-\frac{1}{1+0.005^{48}})}{0.005}\\\\=100 \times \frac{(1-\frac{1}{1+3.55})}{0.005}\\\\=100 \times \frac{(1-\frac{1}{4.55})}{0.005}\\\\=100 \times \frac{(\frac{4.55 -1}{4.55})}{0.005}\\\\=100 \times \frac{(\frac{3.55}{4.55})}{0.005}\\\\=100 \times 0.0039010989\\\\=0.39010989$