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Your grandmother is gifting you $150 a month for four years while you attend college to earn your bachelor's degree. At a 4.8 percent discount rate, what are these payments worth to you on the day you enter college?

Answer :

These payments worth to you on the day you enter college is $143 every four months.

Explanation:

Gifting you $150 a month for four years

At a 4.8 percent discount rate.

The payments worth to you on the day you enter college can be calculated as

  • \frac{4.8}{100} × 150   is 7.2
  • therefore, the payment worth to me on the day of enter college would be 150 - 7.2 = 142.8
  • $143 is the amount that will be collected when I enter college.

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