Your parents plan to give you $200 a month for four years while you are in...

Your parents plan to give you $200 a month for four years while you are in college. At a discount rate of 6 percent, compounded monthly, what are these payments worth to you when you first start college?

$8,797.40

$8,409.56

$8,198.79

$8,516.06

$8,279.32

Expert Solution

	Payments worth	P×[1-(1÷(1+r)^n)]÷r

	Here,

1	Interest rate per annum	6.00%
2	Number of years	4
3	Number of compoundings per per annum	12
4 = 1÷3	Interest rate per period ( r)	0.50%
5 = 2×3	Number of periods (n)	48
	Payment per period (P)	$ 200

	Payments worth	$ 8,516.06
		200*[1-(1/(1+0.50%)^48]/0.50%

jeff jeffy answered 3 years ago

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